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“Whether the document Ex.P­6 required registration as by way of said document the interest in immovable property worth more than Rs.100/­ was transferred in favour of the plaintiff?”

In other words to put the binding effect and the essentials of a family settlement in a concretised form, the matter may be reduced into the form of the following propositions:

“(1) The family settlement must be a bona fide one so as to resolve family disputes and rival claims by a fair and equitable division or allotment of properties between the various members of the family;

(2) The said settlement must be voluntary and should not be induced by fraud, coercion or undue influence;

(3) The family arrangement may be even oral in which case no registration is necessary;

(4) It is well­settled that registration would be necessary only if the terms of the family arrangement are reduced into writing. Here also, a distinction should be made between a document containing the terms and recitals of a family arrangement made under the document and a mere memorandum prepared after the family arrangement had already been made either for the purpose of the record or for information of the court for making necessary mutation. In such a case the memorandum itself does not create or extinguish any rights in immovable properties and therefore does not fall within the mischief of Section 17(2) of the Registration Act and is, therefore, not compulsorily registrable;

(5) The members who may be parties to the family arrangement must have some antecedent title, claim or interest even a possible claim in the property which is acknowledged by the parties to the settlement. Even if one of the parties to the settlement has no title but under the arrangement the other party relinquishes all its claims or titles in favour of such a person and acknowledges him to be the sole owner, then the antecedent title must be assumed and the family arrangement will be upheld and the courts will find no difficulty in giving assent to the same;

(6) Even if bona fide disputes, present or possible, which may not involve legal claims are settled by a bona fide family arrangement which is fair and equitable the family arrangement is final and binding on the parties to the settlement.” (emphasis supplied) Again, in paragraph 24, this Court restated that a family arrangement being binding on the parties, clearly operates as an estoppel, so as to preclude any of the parties who have taken advantage under the agreement from revoking or challenging the same. In paragraph 35, the Court noted as follows: ­ “35. … We have already pointed out that this Court has widened the concept of an antecedent title by holding that an antecedent title would be assumed in a person who may not have any title but who has been allotted a particular property by other party to the family arrangement by relinquishing his claim in favour of such a donee. In such a case the party in whose favour the relinquishment is made would be assumed to have an antecedent title. …..” And again, in paragraph 36, the Court noted as follows: ­ “36. … Yet having regard to the near relationship which the brother and the son­in­law bore to the widow the Privy Council held that the family settlement by which the properties were divided between these three parties was a valid one. In the instant case also putting the case of Respondents Nos. 4 and 5 at the highest, the position is that Lachman died leaving a grandson and two daughters. Assuming that the grandson had no legal title, so long as the daughters were there, still as the settlement was made to end the disputes and to benefit all the near relations of the family, it would be sustained as a valid and binding family settlement. …” While rejecting the argument regarding inapplicability of principle of estoppel, the Court observed as follows: ­ “38. … Assuming, however, that the said document was compulsorily registrable the courts have generally held that a family arrangement being binding on the parties to it would operate as an estoppel by preventing the parties after having taken advantage under the arrangement to resile from the same or try to revoke it. …..” (emphasis supplied) And in paragraph 42, the Court observed as follows: ­

In these circumstances there can be no doubt that even if the family settlement was not registered it would operate as a complete estoppel against Respondents Nos. 4 and 5. Respondent No. 1 as also the High Court, therefore, committed substantial error of law in not giving effect to the doctrine of estoppel as spelt out by this Court in so many cases. …” (emphasis supplied) The view so taken is backed by the consistent exposition in previous decisions8 referred to and duly analysed in the reported judgment. The question formulated by the High Court, in our opinion, stands answered in favour of the appellants (plaintiff), in 8 Lala Khunni Lal vs. Kunwar Gobind Krishna Narain, ILR 33 All 356 Mt. Hiran Bibi vs. Mst. Sohan Bibi, AIR 1914 PC 44 Sahu Madho Das vs. Pandit Mukand Ram, AIR 1955 SC 481 Ram Charan Das vs. Girjanandini Devi, AIR 1966 SC 323 Tek Bahadur Bhujil vs. Debi Singh Bhujil, AIR 1966 SC 292 Maturi Pullaiah vs. Maturi Narasimham, AIR 1966 SC 1836 Krishna Biharilal vs. Gulabchand, (1971) 1 SCC 837 S. Shanmugam Pillai vs. K. Shanmugam Pillai, (1973) 2 SCC 312 Ramgopal vs. Tulshi Ram, AIR 1928 All 641 Sitala Baksh Singh vs. Jang Bahadur Singh, AIR 1933 Oudh 347 Mst. Kalawati vs. Sri Krishna Prasad, AIR 1944 Oudh 49 Bakhtawar vs. Sunder Lal, AIR 1926 All 173 Awadh Narain Singh vs. Narain Mishra, AIR 1962 Pat 400 Ramgouda Annagouda vs. Bhausaheb, AIR 1927 PC 227 Brahmanath Singh vs. Chandrakali Kuer, AIR 1961 Pat 79 Mst. Bibi Aziman vs. Mst. Saleha, AIR 1963 Pat 62 Kanhai Lal vs. Brij Lal, AIR 1918 PC 70 Dhiyan Singh vs. Jugal Kishore, AIR 1952 SC 145 T.V.R. Subbu Chetty’s Family Charities vs. M. Gaghava Mudaliar, AIR 1961 SC Rachbha vs. Mt. Mendha, AIR 1947 All 177 Chief Controlling Revenue Authority vs. Smt. Satyawati Sood, AIR 1972 Delhi 171 (FB) Shyam Sunder vs. Siya Ram, AIR 1973 All 382 light of exposition of this Court in Kale (supra)., it was not required to be registered and in any case, keeping in mind the settled legal position, the contesting defendants were estopped from resiling from the stated arrangement in the subject memorandum, which had recorded the settlement terms arrived at in the past and even acted upon relating to all the existing or future disputes qua the subject property amongst the (signatories) family members despite absence of antecedent title to the concerned property.

As regards the decision in Bhoop Singh (supra) and Som Dev & Ors. vs. Rati Ram & Anr. 9, the same dealt with the question of necessity to register any decree or order of a Court 9 (2006) 10 SCC 788 governed by clause (vi) of Section 17(2) of the Registration Act, 190810. In the present case, however, clause (v) of sub­Section 2 of Section 17 of the 1908 Act is attracted. Section 17 as applicable when the cause of action arose (prior to amendment of 2001) reads thus: ­ “Part III OF REGISTRABLE DOCUMENTS

  1. Documents of which registration is compulsory.­ (1) xxx xxx xxx (2) Nothing in clauses (b) and (c) of sub­section (1) applies to –

(i) xxx xxx xxx

(ii) xxx xxx xxx

(iii) xxx xxx xxx

(iv) xxx xxx xxx

(v) any document not itself creating, declaring, assigning, limiting or extinguishing any right, title or interest of the value of one hundred rupees and upwards to or in immovable property, but merely creating a right to obtain another document which will, when executed, create, declare, assign, limit or extinguish any such right, title or interest; or …..”

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The relevant judgment : by Hon’ble Supreme court of India.

Ravinder Kaur Grewal & Ors.  Vs Manjit Kaur & Ors. CIVIL APPEAL NO. 7764 OF 2014

 

 

Constitution  of  India, 1950, Arts,  14  and  16–Selection

grade  posts in Indian Police Service–Appointment on  basis

of merit and seniority considered only when merit  equal–If

violative of the guarantee of equality.

The  All  India  Services Act,1951,  empowers    the-Central

Government  to make rules for the regulation of            recruitment

and  conditions of service of persons appointed to  an All

India  Service. In  exercise of  this            power            the  Central

Government  framed the Indian Police Service (Regulation  of

Seniority)  Rules, 1954.  Rule 6 of the said Rules  requires

that  a Gradation List of all Police Officers in  a  State

should            be   maintained  to  ascertain their             respective

seniority.   Accordingly, a Gradation List wag    prepared  by

the  respondent-State in which the petitioner was  shown  as

senior to respondents 3 and 4. In 1955, the petitioner   was

superseded by respondents 3 and 4 who were confirmed in    the

rank of Deputy Inspector General of Police, and in 1966, the

third respondent was promoted as Inspector General of Police

and  respondent 4  was appointed  as  Additional  Inspector

General  of  Police,  superseding  the petitioner.            The

petitioner  filed a writ petition in this Court        under Art.

32,  contending that: (1) he was entitled as  a  matter  of

right to big appointed as Deputy Inspector General of Police

in  1955 and as Inspector General of Police, in 1966, as  he

was shown as the senior most officer in the Gradation  List;

(2)  in the  absence  of,  any statutory  rules  governing

promotions to selection grade posts the Government could not

issue administrative instructions imposing restrict-ions not

found in the Rules already framed such as that merit and not

seniority should be considered; (3) the introduction of            the

idea  of merit into the procedure of promotion is  violative

of Arts. 14 and 16, because, it brings in an element of per-

sonal evaluation with the consequent abuses of nepotism       and

favouritism;  and (4) if the Government is held to have            the

power  to  make appointments without making  rules  in          that

behalf under the proviso to Art, 309, then the    appointments

of respondents 3 and 4 would be arbitrary, capricious and in

violation  of Arts. 14 and 16 of the Constitution,  because,

the  claims of the petitioner were not considered either  in

1955 or in 1966.

A perusal of rr. 3 and 8 of the Indian       Police

Service (Pay) Rules, 1954, read with Part B of Schedule          III

of  those  Rules  shows  that  the  three  posts  of  Deputy

Inspector  General of Police.  Additional Inspector  General

of  Police  and Inspector  General  of Po’  lice  in           the

respondent  State, are selection posts outside     the  junior’

and senior time scales of Pay.Promotion to selection grade

or selection posts is to be based primarily on merit and not

on  seniority alone and therefore, the respondent-State            was

not  bound to promote the petitioner merely because  he         was

senior in the Gradation List.  [118D-F].

(2)While  Government cannot amend or  supersede statutory

rules by administrative instructions, if rules are silent on

any  particular point, Government can fill up the  gaps and

supplement the rules and issue instructions not inconsistent

with the rules already framed.

The State Government has executive power in respect of State

Public Services mentioned in Entry 41, List II of  Schedule

VII of the Constitution, and, there is nothing in the  terms

of Art. 309 which abridges the power of the executive to act

under Art. 162 without a law. [119 F-G, H].

  1. Cajee v. U. Jormanik Siem, [1961] 1 S.C.R. 750 and  B.
  2. Na. garajanv. State of Mysore, [1966]  3  S.C.R.  682,

followed.

(3)  To            ensure a reasonable prospect of advancement to          all

officials  and at  the same time  to            protect            the  public

interest in having posts filled by the most able men, it  is

necessary  to evolve a proper promotion policy in  which  is

found  a correct balance between seniority and merit.  As  a

matter of  long  administrative  practice   promotion      to

selection grade or selection posts in the Indian Police Ser-

vice  had been based on merit, and seniority was taken            into

consideration only when merit of the candidates is otherwise

equal and no other criterion is available.  Such a procedure

does  not, in any way, violate the guarantee under Arts.  14

and 16 of the Constitution [112E; 123C-D].

(4)The            respondent-State  had considered the case  of  the

petitioner and taken into account the record, experience and

merit of the petitioner and of every other officer  entitled

to  be  considered  at  the time  of  the  promotion  before

promotion  of  respondents 3 and 4 to  selection  posts was

made,  and therefore, there was no breach of the  provisions

of Arts. 14 and 16. [121D-E].

In the Matter of Sant Ram Sharma vs vs State Of Rajasthan & Anr, The Ho’ble Court held that :-

The question for determination in this case is whether the petitioner was entitled, as of right, to be promoted as Deputy Inspector General of Police in 1955 or as Inspector General of Police in 1966 merely on the ground that his name stood first in the Gradation List prepared under Rule 6 of the Indian Police Service (Regulation of Seniority) Rules, 1954.

Sub-section (1) of s. 3 of the All India Services Act, 1951 (LXI of 1951) empowers the Central Government to make rules for the regulation of recruitment and conditions of service of persons appointed to an All-India Service. In exercise of this power the Central Government framed the Indian Police Service (Regulation of Seniority) Rules, 1954. Rule 2 (a) provides that “Cadre” means “an Indian Police Service Cadre constituted in accordance with rule 3 of the Indian Police Service (Cadre) Rules, 1954”. Rule 2 (d) defines “gradation list” to mean “a gradation list prepared under rule 6”. Rule 2(g) defines a “senior post” to mean “a post Included under item 1 of each Schedule to the Indian Police Service (Fixation of Cadre Strength) Regulations, 1955 or any post declared equivalent thereto by the State Government concerned”. Rule 3 deals with the assignment of year of allotment and reads as follows:-

“(1) Every officer shall be assigned a year of allotment in accordance with the provisions hereinafter contained in this rule. (2)The year of allotment of an officer in service at the commencement of these rules shall be the same as has been assigned to him or may be assigned to him by the Central Government in accordance with the orders and instructions in force immediately before the commencement of these rules:

(3)The year of allotment of an officer appointed to the Service after the commencement of these rules, shall be-

(a) where the officer is appointed to the Service on the results of a competitive examination, the year following the year in which such examination was held;

(b) where the officer is appointed to the Service by promotion in accordance with rule 9 of the Recruitment Rules, the year of allotment of the junior-most among the officers recruited to the Service in accordance with rule 7 of those Rules who officiated continuously in a senior post from a date earlier than the date of commencement of such officiation by the former: Provided that the year of allotment of an officer appointed to the Service in accordance with rule 9 of the Recruitment Rules who started officiating continuously in a senior post from a date earlier than the date on which any of the officers recruited to the Service, in accordance with rule 7 of those Rules, so started officiating shall be determined ad hoc by the Central Government in consultation with the State Government concerned;

Rule 4 relates to seniority of officers and reads as follows: –

“4. (2) The seniority of officers in service at the commencement of these rules shall be as has been determined or may be determined by the Central Government in accordance with the orders and instructions in force immediately before the commencement of these rules: Provided that where the seniority of an officer appointed in accordance with rule 9 of the Recruitment Rules has not been determined before the commencement of these rules, his seniority shall be determined in accordance with the provision in sub-rule (3).

Rule 5 deals with seniority of officers placed in List II and List III by the Special Recruitment Board and Rule 5-A deals with seniority of officers appointed under the Indian Police Service (Special Recruitment) Regulations. 1957. Rule 6 states:

“6. Gradation List.-There shall be prepared every year for each State Cadre and Joint Cadre a gradation list consisting of the names of all officers borne on that Cadre arranged in order of seniority in accordance with the provisions of rules 4, 5, 5-A and 7”.

The question is how to find a correct balance between seniority and merit in a proper promotion-policy. In this connection Leonard D. White has stated as follows:-

“The principal object of a promotion system is to secure the best possible incumbents for the higher positions, while maintaining the morale of the whole Organisation. The main interest to be served is the public interest, not the personal interest of members of the official group concerned. The public interest is best secured when reasonable opportunities for promotion exist for all qualified employees, when really superior civil servants are enabled to move as rapidly up the Promotion ladder as their merits deserve and as vacancies occur, and when selection for promotion is made on the sole basis of merit. For the merit system ought to apply as specifically in making promotions as in original recruitment.

Employees often prefer the rule of seniority, by which the eligible longest in service is automatically awarded the promotion. Within limits, seniority is entitled to consideration as one criterion of selection. It tends to eliminate favouritism or the suspicion thereof; and experience is certainly a factor in the making of a successful employee. Seniority is given most weight in promotions from the lowest to other subordinate positions. As employees move up the ladder of responsibility, it is entitled to less and less weight. When seniority is made the sole determining factor, at any level. it is a dangerous guide. It does not follow that the employee longest in service in a particular trade is best suited for promotion to a higher grade; the very opposite may be true”.

 

Whether  ad hoc appointment for the purpose of seniority can be counted ?.

In the matter of  Direct Recruit Class II Engineering Officers’ Association v. State of Maharashtra & Ors.1, the High Court was of the opinion that an ad hoc appointee shall be entitled to count the entire service for seniority from the date of ad hoc appointment to the date of regularisation if he was in continuous service, without any interruption, till the  date of his regularisation. The High Court observed that although the initial appointments of the Writ Petitioners were not in accordance with the procedure prescribed for making appointment, they cannot be deprived of the benefit of the service rendered by them on ad hoc basis for the purpose of seniority and promotion. Accordingly, the High Court by its judgment dated 07.09.2011 allowed the Writ Petition Nos.187 of 2010, 188 of 2010 and 220 of 2010. Later, Writ Petition No.58 of 2011 on 30.11.2011 was disposed of in terms of the judgment in Writ Petition No187 of 2010 and other Writ Petitions.

It was contended on behalf of the promotees that the judgment of the High Court dated 07.09.2011 directing the benefit of the ad hoc service to be given to the promotees does not call for interference. They relied upon the proviso to sub-rule (4) of Rule 24 of the 2005 Rules to submit that they have a right to claim that the period of continuous officiation prior to the dates of their regular appointment should be counted for seniority. It was argued that the initial promotion on ad hoc basis in the year 2004 was after  a process of selection. They were continuously discharging their duties as Deputy Collectors till they were selected by the Public Service Commission and regularly appointed in the year 2007. If their service from 2004 is treated as regular, the direct recruits who were appointed in 2005 cannot be shown as seniors to them in the seniority list of Deputy Collectors. The grievance raised by them regarding the Office Memorandum that was issued by the Government of Uttarakhand on 21.10.2015 is that the Deputy Collectors who were allotted to the State of Uttarakhand but continued to work in the State of Uttar Pradesh were shown to have occupied the post of Deputy Collectors in the promotee quota. According to them, some of the Deputy Collectors who continued to work in the State of Uttar Pradesh have retired on attaining the age of superannuation. For all practical purposes including the payment of pension, they cannot be treated to have held a civil post in the State of Uttarakhand. Inclusion of their names in the seniority list of Deputy Collectors has been done only to deprive the promotees the legitimate seniority to which they were entitled. The implementation of the judgments dated 30.11.2011 in Writ Petition No.58 of 2011 and 07.09.2011 in Writ Petition Nos.187 of 2010, 188 of 2010, 220 of 2010 and the deletion of those Deputy Collectors who never worked in the State of Uttarakhand from the promotee quota would result in the promotees being accorded their rightful place in the seniority list.

In the matter of  State of West Bengal & Ors. v. Aghore Nath Dey & Ors. It was held as follows:

“22. There can be no doubt that these two conclusions have to be read harmoniously, and conclusion (B) cannot cover cases which are expressly excluded by conclusion (A). We may, therefore, first refer to conclusion (A). It is clear from conclusion (A) that to enable seniority to be counted from the date of initial appointment and not according to the date of confirmation, the incumbent of the post has to be initially appointed ‘according to rules’. The corollary set out in conclusion (A), then is, that ‘where the initial appointment is only ad hoc and not according to rules and made as a stopgap arrangement, the officiation in such posts cannot be taken into account for considering the seniority’. Thus, the corollary in conclusion (A) expressly excludes the category of cases where the initial appointment is only ad hoc and not according to rules, being made only as a stopgap arrangement. The case of the writ petitioners squarely falls within this corollary in conclusion (A), which says that the officiation in such posts cannot be taken into account for counting the seniority.

 

In the matter of    Vinod Giri Goswami & Ors vsthe state of Uttrakhand in Civil Appeal No. 1606 of 2020, The Hon’ble Supreme Court held as under :-

 

” In view of our conclusion that the promotees are not entitled to count their ad hoc service for the purpose of computing their seniority. For the aforementioned reasons, the Civil Appeal @ S.L.P. (Civil) No.2779 of 2012, Civil Appeal @ S.L.P. (Civil) Nos.6847- 6848 of 2012, Civil Appeal @ S.L.P. (Civil) Nos.9885- 9886 of 2012, Civil Appeal @ S.L.P. (Civil) Nos.9910- 9911 of 2012, Civil Appeal @ S.L.P. (Civil) Nos.33762- 33763 of 2012, Civil Appeal @ S.L.P. (Civil) Nos.33750- 33751 of 2012, Civil Appeal @ S.L.P. (Civil) Nos.33759- 33760 of 2012 are allowed and the Civil Appeal @ S.L.P. (Civil) No.18604 of 2019 is dismissed.”

 

 

 

 

This Court has laid down in the case of Chiranjilal Shrilal Goenka vs. Jasjit Singh and Others (1993) 2 SCC 507 the primacy of the Probate Court on the question of validity of a Will. On behalf of the respondents, a decision of this court in the case of Kanwarjit Singh Dhillon vs. Hardyal Singh Dhillon & Others (2007) 11 SCC 357 has been cited. This case is an authority on the point that the Probate Court is not competent to determine the question of title of the properties forming subject-matter of a Will. In another decision, Binapani Kar Chowdhury vs. Sri Satyabrata Basu and Another (2006) 10 SCC 442 the question involved was as to whether a legal representative could prosecute a civil suit filed by the Testator during his lifetime for recovery of possession against third party. The legal representative in that case wanted to be substituted as plaintiff in the civil suit in the capacity of executor and legatee of the will of the Testator, who was plaintiff in the suit. Such a course was found to be permissible. This opinion of the Court was qualified with the direction that if the suit was ultimately decreed, the Trial Court should make it clear that the judgment and decree would come into effect only on such legal representative obtaining and producing the probate of the Will. Till such time the decree was to be kept provisional and not to be given effect. But ratio of this judgment does not apply in the facts of this case. The Delhi High Court, in the case of Praveer Chandra vs. Aprajita & Others (2019 SCC Online Delhi 10820) has followed the course directed in the case of Binapani Kar Chowdhury (supra) and has held that a partition suit and Probate Proceeding could proceed simultaneously, but if the Partition suit was decreed, the decree would come into effect after the decision in the Probate proceeding. This view was taken, however, in an application filed under Section 10 of the Code of Civil Procedure, 1908, in which the partition suit was sought to be stayed.

The Testamentary proceeding would have direct bearing or impact on the pending suit for partition. If the Letters of Administration is granted to the petitioner in the Testamentary proceeding, then the assets of the deceased may not remain available as the partible estate of Pawan Kumar Singha (deceased). In the plaint of the suit for partition, a copy of which has been annexed to this Transfer Petition, the properties of Pawan Kumar Singha (deceased) have been listed in paragraph 2 thereof, referring these assets as that of the deceased. The character of these assets as joint property of Rashmi Ahluwalia and the deceased, however, has been only hinted in the affidavit taken out in support of the Chamber Summons in the Testamentary petition. The respondents are contesting the petition for grant of Letters of Administration. If the partition suit proceeds independently and plaintiffs therein succeed, then there would be a possibility of inconsistent findings by two High Courts, provided the petitioners succeed in the Testamentary proceeding. In situations of this nature, this Court in the cases of Balbir Singh Wasu vs. Lakhbir Singh And Others [(2005) 12 SCC 503], Nirmala Devi (supra) and Chitivalasa Jute Mills (supra), has directed clubbing together of both proceedings for hearing. I am satisfied that certain common issues would arise for adjudication of both these proceedings. In the written statement of the first and second defendants in the partition suit, the point of execution of the Will by Pawan Kumar Singha (deceased) has been raised.

­­­­­­­­­­­­­­­­­­­­­­­­­_____________________________________________________________________________________

IN THE SUPREME COURT OF INDIA

CIVIL ORIGINAL JURISDICTION

TRANSFER PETITION (CIVIL) NO. 1531 OF 2018

SHAMITA SINGHA & ANR.                       ..PETITIONERS

VERSUS

RASHMI AHLUWALIA & ANR.                     ..RESPONDENTS

J U D G M E N T

ANIRUDDHA BOSE, J.

The petitioners in this proceeding are both daughters of Late Pawan Kumar Singha(deceased). They seek transfer of a suit for partition and Signature Not Verified certain other ancillary reliefs instituted in Digitally signed by DEEPAK SINGH Date: 2020.06.19 17:42:28 IST Reason:

the Delhi High Court. The said suit has been registered as CS(OS)No.2888 of 2014. The plaintiff in that suit is Rashmi Ahluwalia, who is the widow of the deceased. She was the second wife of the deceased. The petitioners in this proceeding, Shamita Singha and Masoom Singha are daughters of Pawan Kumar Singha, deceased, from his first marriage, which was later dissolved. Both of them have been impleaded as defendants in that suit for partition. The third defendant in that suit is Ms.Sanjana, who is the daughter of Rashmi Ahluwalia, from her first marriage. It has been pleaded in the plaint that after her marriage to the deceased, Sanjana was “accepted/adopted” by the deceased Pawan Kumar Singha as his own daughter. Sanjana is the second respondent in this petition. The first petitioner, Shamita Singha has applied for grant of Letters of Administrations to the estate of the deceased Pawan Kumar Singha on the basis of his Will dated 15th January, 2014. A petition to that effect has been filed in the Testamentary and Intestate jurisdiction of the Bombay High Court. That petition, filed on 22nd April 2016, has been registered as “T. Petition No. 821 of 2016”. Rashmi Ahluwalia and said Ms. Sanjana Ahluwalia, have put in appearance in the Testamentary Petition. They question, inter-alia, the legality of the Will and contend that it is forged.

  1. So far as the suit in the Delhi High Court is concerned, this has been instituted prior in time, on 18th September, 2014. In the CS(OS) No. 2888 of 2014, Rashmi Ahluwalia has claimed partition of the estate of the deceased and has sought declaration to the effect that she is entitled to 1/4th share of the estate. The schedule of assets forming part of the petition for Letters of Administration and the table of assets given in the suit for partition have several common movable and immovable properties. Thus, the assets which the petitioners claim to have been bequeathed to them by the testator also forms subject-matter of the suit for partition.
  2. The petitioners’ case argued by Ms. Arora, learned counsel, is that the Probate Court has exclusive jurisdiction in matters relating to legality of a will and for that reason, her plea is that it would be expedient that the suit instituted in the Delhi High Court should be transferred to the Probate Court. Ms. Arora has relied on a decision of this Court in the case of Nirmala Devi vs. Arun Kumar Gupta and Others (2005) 12 SCC 505 in support of her submission that the suit for partition can be clubbed together with a Testamentary proceeding. This argument is founded on the reasoning that the decision in the Testamentary proceeding on the question of validity of the Will shall have direct impact on the partition suit. Ms. Mishra, learned counsel for the respondents, on the other hand has pressed for continuance of the suit in the Delhi High Court. It is her submission that both the proceedings can simultaneously run in the respective fora in which they have been instituted. Her alternative plea is that the Suit for partition having been instituted before the Probate Proceeding, the latter ought to be transferred to the Delhi High Court, if clubbing together of the two proceedings is at all warranted. She has drawn my attention to Section 270 of the Indian Succession Act, 1925 to contend that the Delhi High Court also has jurisdiction to try the Probate Proceeding.
  3. This Court has laid down in the case of Chiranjilal Shrilal Goenka vs. Jasjit Singh and Others (1993) 2 SCC 507 the primacy of the Probate Court on the question of validity of a Will. On behalf of the respondents, a decision of this court in the case of Kanwarjit Singh Dhillon vs. Hardyal Singh Dhillon & Others (2007) 11 SCC 357 has been cited. This case is an authority on the point that the Probate Court is not competent to determine the question of title of the properties forming subject-matter of a Will. In another decision, Binapani Kar Chowdhury vs. Sri Satyabrata Basu and Another (2006) 10 SCC 442 the question involved was as to whether a legal representative could prosecute a civil suit filed by the Testator during his lifetime for recovery of possession against third party. The legal representative in that case wanted to be substituted as plaintiff in the civil suit in the capacity of executor and legatee of the will of the Testator, who was plaintiff in the suit. Such a course was found to be permissible. This opinion of the Court was qualified with the direction that if the suit was ultimately decreed, the Trial Court should make it clear that the judgment and decree would come into effect only on such legal representative obtaining and producing the probate of the Will. Till such time the decree was to be kept provisional and not to be given effect. But ratio of this judgment does not apply in the facts of this case. The Delhi High Court, in the case of Praveer Chandra vs. Aprajita & Others (2019 SCC Online Delhi 10820) has followed the course directed in the case of Binapani Kar Chowdhury (supra) and has held that a partition suit and Probate Proceeding could proceed simultaneously, but if the Partition suit was decreed, the decree would come into effect after the decision in the Probate proceeding. This view was taken, however, in an application filed under Section 10 of the Code of Civil Procedure, 1908, in which the partition suit was sought to be stayed.
  4. In Chitivalasa Jute Mills vs. Jaypee Rewa Cement [(2004) 3 SCC 85], this Court has broadly laid down the guideline to be followed while dealing with the question of transfer of suit under Section 25 of the Code. In that case, parties were substantially the same in two suits. The disputes arose out of same set of transactions. The cause of action of the suit alleged by one party was its ground of defence in the other suit. This Court found that the same set of evidence would be needed in both the suits. In such circumstances, this Court opined that the two suits ought not to be tried separately.
  5. In the facts of this case, the outcome of the Probate proceeding in my opinion would have impact on the suit for partition pending before the Delhi High Court. Majority of the assets in respect of which Letters of Administration has been sought for are common to those in respect of which partition is asked for. Of course, grant of Letters of Administration, if ordered, per se would not determine the title of the testator in the assets scheduled to the Testamentary Petition. I find from the joint affidavit of the respondents herein filed in support of the Chamber Summons taken out by them in the aforesaid Testamentary Petition that they are contending the Will to be a forged one. In the same affidavit, the deponent of which is Rashmi Ahluwalia, it has also been pleaded that during the period of her marriage with the deceased, they had purchased various properties together.
  6. I have already observed that the Testamentary proceeding would have direct bearing or impact on the pending suit for partition. If the Letters of Administration is granted to the petitioner in the Testamentary proceeding, then the assets of the deceased may not remain available as the partible estate of Pawan Kumar Singha (deceased). In the plaint of the suit for partition, a copy of which has been annexed to this Transfer Petition, the properties of Pawan Kumar Singha (deceased) have been listed in paragraph 2 thereof, referring these assets as that of the deceased. The character of these assets as joint property of Rashmi Ahluwalia and the deceased, however, has been only hinted in the affidavit taken out in support of the Chamber Summons in the Testamentary petition. The respondents are contesting the petition for grant of Letters of Administration. If the partition suit proceeds independently and plaintiffs therein succeed, then there would be a possibility of inconsistent findings by two High Courts, provided the petitioners succeed in the Testamentary proceeding. In situations of this nature, this Court in the cases of Balbir Singh Wasu vs. Lakhbir Singh And Others [(2005) 12 SCC 503], Nirmala Devi (supra) and Chitivalasa Jute Mills (supra), has directed clubbing together of both proceedings for hearing. I am satisfied that certain common issues would arise for adjudication of both these proceedings. In the written statement of the first and second defendants in the partition suit, the point of execution of the Will by Pawan Kumar Singha (deceased) has been raised.
  7. Ms. Mishra has argued that the suit for partition having been instituted before the Testamentary Petition, her client’s suit must be allowed to proceed first and the Testamentary Petition could be transferred to Delhi High Court, if necessary. It is also her submission that major portion of the assets of the deceased lie in Delhi. A petition for transfer under Section 25 of the Code, however, is decided on consideration of the ends of justice. The “First past the post” is not the principle that can be applied in proceedings of this nature. Thus, the view taken by the Delhi High Court in the case of Praveer Chandra (supra) would not aid the respondents here, as that proceeding was founded on a different principle embodied in Section 10 of the Code. I am of the opinion that the Probate Court having primacy in determining the question of grant of Letters of Administration or Probate, it would be expedient for the ends of justice that the Bombay High Court, which is hearing the Testamentary petition, should decide the suit for partition as well. The plaintiffs in the suit for partition are also contesting the Testamentary Petition and they would not be greatly inconvenienced in prosecuting the suit before the Bombay High Court. The petitioners claim that the Will has been executed in Mumbai and the two attesting witnesses who have affirmed affidavits to support the Will are also from Mumbai. Copies of these affidavits appear at pages 39 and 41 of the paper book filed in connection with the Transfer Petition. These are also factors which I have considered in forming my opinion in favour of transfer of the suit.
  8. I accordingly direct that the suit filed in the Delhi High Court by Rashmi Ahluwalia registered as C.S.(O.S.) No.2888 of 2014 be transferred from the said High Court to the Bombay High Court. On transfer, the said suit is to be listed before the Hon’ble Judge before whom Testamentary Petition No.821 of 2016 is pending adjudication. The Hon’ble Judge may hear both the proceedings simultaneously, clubbing them together, if necessary. In the event the Hon’ble Judge before whom the said Testamentary Petition is listed or pending listing does not have the determination to hear the suit for partition as per the roster of the Bombay High Court, then the file may be placed before the Hon’ble Chief Justice, Bombay High Court, for appropriate order of assignment so that both the Suit and the Testamentary petition can be heard together.
  9. The Transfer Petition is allowed in the above terms. Interim order, if any, shall stand dissolved.
  10. There shall be no order as to costs.

The High Court does not have the power to convert the writ Petition to Appeal.

The Hon’ble Supreme Court in the matter of :   MOHD. INAM   vs SANJAY KUMAR SINGHAL & ORS.   in  CIVIL APPEAL NO._2697 OF 2020 held and relied on earlier judgments that:-

In the present case, we are of the considered view, that the approach of the High Court in exercising the jurisdiction under Article 227 of the Constitution of India was 11 (1975) 1 SCC 858 12 (1977) 4 SCC 587 13 (1978) 2 SCC 573 14 (1982) 3 SCC 514 15 (1986) 4 SCC 447 16 (1987) 3 SCC558 17 (2001) 1 SCC 4 18 (2003) 6 SCC 641 19 (2004) 3 SCC 682 20 (2008) 9 SCC 1 21 (2010) 1 SCC 217 totally erroneous. The learned District Judge while exercising his power under Section 18 of the U.P. Act, 1972 and after finding that the order passed by the Rent Controller and Eviction Officer was totally contrary to the law laid down by this Court in Harish Tandon (supra), while interpreting clause (b) of sub­section (1) of Section 12 of the U.P. Act, 1972 and also that the order passed was totally on a perverse reading of the evidence, had interfered with the said order and reversed the same. The High Court totally misinterpreting the order passed by the earlier learned judge in Writ Petition No.7(MS) of 2003 dated 23.8.2006, on an erroneous premise, held that the vacancy order could not have been challenged along with the final order. The finding is totally contrary to the law laid down by the bench of three learned judges of this Court in Achal Misra (supra), a relevant part of which was reproduced by the High Court in its earlier order dated 23.8.2006. The learned judge ignoring Achal Misra (supra), which is a binding precedent, relies on an order of one paragraph of the two learned judges of this Court while holding that the revision was not maintainable. We, therefore, are of the considered view, that the exercise of jurisdiction by the High Court under Article 227 in the present case was patently unwarranted and unjustified.

It is a well settled principle of law, that in the guise of exercising jurisdiction under Article 227 of the Constitution of India, the High Court cannot convert itself into a court of appeal. It is equally well settled, that the supervisory jurisdiction extends to keeping the subordinate tribunals within the limits of their authority and seeing that they obey the law. It has been held, that though the powers under Article 227 are wide, they must be exercised sparingly and only to keep subordinate courts and Tribunals within the bounds of their authority and not to correct mere errors. Reliance in this respect can be placed on a catena of judgments of this Court including the ones in Satyanarayan Laxminarayan Hegde & Ors. vs. Millikarjun Bhavanappa Tirumale10, Bathutmal Raichand Oswal vs. Laxmibai R. 10 (1960) 1 SCR 890 Tarta & Anr.11, M/s India Pipe Fitting Co. vs. Fakruddin M. A. Baker & Anr.12, Ganpat Ladha v. Sashikant Vishnu Shinde13, Mrs. Labhkuwar Bhagwani Shaha & Ors. vs. Janardhan Mahadeo Kalan & Anr.14, Chandavarkar Sita Ratna Rao vs. Ashalata S. Guram15, Venkatlal G. Pittie and another vs. Bright Bros (Pvt.) Ltd.16, State of Maharashtra vs. Milind & Ors.17, State Through Special Cell, New Delhi vs. Navjot Sandhu Alias Afshan Guru and others18, Ranjeet Singh vs. Ravi Prakash19, Shamshad Ahmad & Ors. vs. Tilak Raj Bajaj (Deceased) Through LRs. and others20, Celina Coelho Pereira (Ms.) and others vs. Ulhas Mahabaleshwar Kholkar and others21.

I the matter of University of Delhi   vs   Union of India & Ors                          

Held that:

From a consideration of the view taken by this Court through the decisions cited supra the position is clear that, by and large, a liberal approach is to be taken in the matter of condonation of delay. The consideration for condonation of delay would not depend on the status of the party namely the Government or the public bodies so as to apply a different yardstick but the ultimate consideration should be to render even­ handed justice to the parties. Even in such case the condonation of long delay should not be automatic since the accrued right or the adverse consequence to the opposite party is also to be kept in perspective. In that background while considering condonation of delay, the routine explanation would not be enough but it should be in the nature of indicating “sufficient cause” to justify the delay which will depend on the backdrop of each case and will have to be weighed carefully by the Courts based on the fact situation. In the case of Katiji (Supra) the entire conspectus relating to condonation of delay has been kept in focus. However, what cannot also be lost sight is that the consideration therein was in the background of dismissal of the application seeking condonation of delay in a case where there was delay of four days pitted against the consideration that was required to be made on merits regarding the upward revision of compensation amounting to 800 per cent.

in the case of Collector, Land Acquisition, Anantnag & Anr.vs. Katiji & Ors., 1987(2) SCC 107 wherein it is held as hereunder:

“3. The legislature has conferred the power to condone delay by enacting Section 5 [ Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908, may be
admitted after the prescribed period if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period.] of the Indian Limitation Act of 1963 in order to enable the courts to do substantial justice to parties by disposing of matters on ”merits”. The expression “sufficient cause” employed by the legislature is adequately elastic to enable the courts to apply the law in a meaningful manner which subserves the ends of justice — that being the life-purpose for the existence of the institution of courts. It is common knowledge that this Court has been making a justifiably liberal approach in matters instituted in this Court. But the message does not appear to have percolated down to all the other courts in the hierarchy. And such a liberal approach is adopted on principle as it is realized that:

“1. Ordinarily a litigant does not stand to benefit by lodging an appeal late.

  1. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties.
  2. “Every day’s delay must be explained” does not mean that a pedantic approach should be made. Why not every hour’s delay, every second’s delay? The doctrine must be applied in a rational common-sense pragmatic manner.
  3. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay.
  4. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk.
  5. It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is
    capable of removing injustice and is expected to do so.

Making a justice-oriented approach from this perspective, there was sufficient cause for condoning the delay in the institution of the appeal. The fact that it was the “State” which was seeking condonation and not a private party was altogether irrelevant. The doctrine of equality before law demands that all litigants, including the State as a litigant, are accorded the same treatment and the law is administered in an even-handed manner. There is no warrant for according a step-motherly treatment when the “State” is the applicant praying for condonation of delay. In fact experience shows that on account of an impersonal machinery (no one in charge of the matter is directly hit or hurt by the judgment sought to be subjected to appeal) and the inherited bureaucratic methodology imbued with the note-making, file- pushing and passing-on-the-buck ethos, delay on its part is less difficult to understand though more difficult to approve. In any event, the State which represents the collective cause of the community, does not deserve a litigant-non- grata status. The courts therefore have to be informed with the spirit and philosophy of the provision in the course of the interpretation of the expression “sufficient cause”. So also the same approach has to be evidenced in its application to matters at hand with the end in view to do even-handed justice on merits in preference to the approach which scuttles a decision on merits. Turning to the facts of the matter giving rise to the present appeal, we are satisfied that sufficient cause exists for the delay. The order of the High Court dismissing the appeal before it as time-barred, is therefore, set aside. Delay is condoned. And the matter is remitted to the High Court. The High Court will now dispose of the appeal on merits after affording reasonable opportunity of hearing to both the sides.”

in the case of Postmaster General & Ors. vs. Living Media India Limited & Anr. 1992 (3) SCC 563 wherein it is held as hereunder:

“28. Though we are conscious of the fact that in a matter of condonation of delay when there was no gross negligence or deliberate inaction or lack of bona fides, a liberal concession has to be adopted to advance substantial justice, we are of the view that in the facts and circumstances, the Department cannot take advantage of various earlier decisions. The claim on account of impersonal machinery and inherited bureaucratic methodology of making several notes cannot be accepted in view of the modern technologies being used and available. The law of limitation undoubtedly binds everybody, including the Government.

 

 

 

 

The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 came into force on 23.10.2015 bringing in their wake certain amendments to the Code of Civil Procedure. In Order V, Rule 1, sub-rule (1), for the second proviso, the following proviso was substituted:

“Provided further that where the defendant fails to file the written statement within the said period of thirty days, he shall be allowed to file the written statement on such other days, as may be specified by the Court, for reasons to be recorded in writing and on payment of such costs as the court deems fit, but which shall not be later than one hundred twenty days from the date of service of summons and on expiry of one hundred and twenty days from the date of service of summons, the defendant shall forfeit the right to file the written statement and the court shall not allow the written statement to be taken on record.” Equally, in Order VIII Rule 1, a new proviso was substituted as follows:

“Provided that where the defendant fails to file the written statement within the said period of thirty days, he shall be allowed to file the written statement on such other day, as may be specified by the court, for reasons to be recorded in writing and on payment of such costs as the Court deems fit, but which shall not be later than one hundred and twenty days from the date of service of summons and on expiry of one hundred and twenty days from the date of service of summons, the defendant shall forfeit the right to file the written statement and the court shall not allow the written statement to be taken on record.” This was re-emphasized by re-inserting yet another proviso in Order VIII Rule 10 CPC, which reads as under:-

“Procedure when party fails to present written statement called for by Court.- Where any party from whom a written statement is required under Rule 1 or Rule 9 fails to present the same within the time permitted or fixed by the Court, as the case may be, the Court shall pronounce judgment against him, or make such order in relation to the suit as it thinks fit and on pronouncement of such judgment a decree shall be drawn up.

Provided further that no Court shall make an order to extend the time provided under Rule 1 of this Order for filing of the written statement.” A perusal of these provisions would show that ordinarily a written statement is to be filed within a period of 30 days.

However, grace period of a further 90 days is granted which the Court may employ for reasons to be recorded in writing and payment of such costs as it deems fit to allow such written statement to come on record. What is of great importance is the fact that beyond 120 days from the date of service of summons, the defendant shall forfeit the right to file the written statement and the Court shall not allow the written statement to be taken on record. This is further buttressed by the proviso in Order VIII Rule 10 also adding that the Court has no further power to extend the time beyond this period of 120 days.

Several High Court judgments on the amended Order VIII Rule 1 have now held that given the consequence of non-filing of written statement, the amended provisions of the CPC will have to be held to be mandatory. [See Oku Tech Private Limited vs. Sangeet Agarwal & Ors. by a learned Single Judge of the Delhi High Court dated 11.08.2016 in CS (OS) No. 3390/2015 as followed by several other judgments including a judgment of the Delhi High Court in Maja Cosmetics vs. Oasis Commercial Pvt. Ltd. 2018 SCC Online Del 6698.

When there is a special provision in the Code of Civil Procedure for dealing with the contingencies of two such suits being instituted, recourse to the inherent powers under s.151 is not justified…” (at page 470) Clearly, the clear, definite and mandatory provisions of Order V read with Order VIII Rule 1 and 10 cannot be circumvented by recourse to the inherent power under Section 151 to do the opposite of what is stated therein.

M/S SCG CONTRACTS INDIA PVT. LTD.

VERSUS

K.S. CHAMANKAR INFRASTRUCTURE PVT. LTD. & ORS

( Supreme Court of India).

. In several judgments, it has been held that courts ought not to grant injunction to restrain encashment of bank guarantees or letters of credit. Two exceptions have been mentioned – (i) fraud and (ii) irretrievable damage. If the plaintiff is prima facie able to establish that the case comes within these two exceptions, temporary injunction under Order 39, Rule 1 CPC can be issued. It has also been held that the contract of the bank guarantee or the letter of credit is independent of the main contract between the seller and the buyer. This is also clear from Articles 3 and 4 of UCP (1983 Revision). In case of an irrevocable bank guarantee or letter of credit the buyer cannot obtain injunction against the banker on the ground that there was a breach of the contract by the seller. The bank is to honour the demand for encashment if the seller pima facie complies with the terms of the bank guarantee or letter of credit, namely, if the seller produces the documents enumerated in the bank guarantee or the letter of credit. If the bank is satisfied on the face of the documents that they are in conformity with the list of documents mentioned in the bank guarantee or the letter of credit and there is no discrepancy, it is bound to honour the demand of the seller for encashment. While doing so it must take reasonable care. It is not permissible for the bank to refuse payment on the ground that the buyer is claiming that there is a breach of contract. Nor can the bank try to decide this question of breach at that stage and refuse payment to the seller. Its obligation under the document having nothing to do with any dispute as to breach of contract between the seller and the buyer……”

cropped-leges_sqaure_logo-1

(underlining added)

  1. Again in Himadri Chemicals Industries Ltd. v. Coal Tar Refining Co.: (2007) 8 SCC 110, the Supreme Court held as under:-

“14. From the discussions made hereinabove relating to the principles for grant or refusal to grant of injunction to restrain enforcement of a bank guarantee or a letter of credit, we find that the following principles should be noted in the matter of injunction to restrain the encashment of a bank guarantee or a letter of credit :

(i) While dealing with an application for injunction in the course of commercial dealings, and when an unconditional bank guarantee or letter of credit is given or accepted, the beneficiary is entitled to realise such a bank guarantee or a letter of credit in terms thereof irrespective of any pending disputes relating to the terms of the contract.

(ii) The bank giving such guarantee is bound to honour it as per its terms irrespective of any dispute raised by its customer.

(iii) The Courts should be slow in granting an order of injunction to restrain the realization of a bank guarantee or a letter of credit.

(iv) Since a bank guarantee or a letter of credit is an independent and a separate contract and is absolute in nature, the existence of any dispute between the parties to the contract is not a ground for issuing an order of injunction to restrain enforcement of bank guarantees or letters of credit.

(v) Fraud of an egregious nature which would vitiate the very foundation of such a bank guarantee or letter of credit and the beneficiary seeks to take advantage of the situation.

(vi) Allowing encashment of an unconditional bank guarantee or a letter of credit would result in irretrievable harm or injustice to one of the parties concerned.”

—————————————————————————————————————————————–

IN THE HIGH COURT OF DELHI AT NEW DELHI

+       FAO (OS) 283/2015

M/S ANIL TIMBER PRIVATE LIMITED                                …. Appellant

versus

M/S ING VYASA BANK LIMITED & ORS.                              ….. Respondents

CORAM

HON’BLE MR JUSTICE BADAR DURREZ AHMED

HON’BLE MR JUSTICE SANJEEV SACHDEVA

JUDGMENT

BADAR DURREZ AHMED, J (ORAL) CM No.12426/2015, CM No.9798/2015 & FAO(OS) 283/2015

  1. CM 12426/2015 has been filed on behalf of the State Bank of India, Chicago Branch, USA for vacation of the stay order which was passed by this Court on 22.05.2015, whereby the operation of the order dated 14.05.2015 passed by the learned Single Judge of this Court in IA No.7054/2015, was stayed. The earlier order dated 29.12.2012 passed by the learned Single Judge which had been in operation prior to the order dated 14.05.2015 was revived for the time being.
  2. The appeal is directed against the order dated 14.05.2015 passed by the learned Single Judge in the said IA 7054/2015 which was an application under Order XXXIX Rules 1 & 2 of the Code of Civil Procedure, 1908 („CPC‟). We had issued notice in the appeal on 22.05.2015 and the returnable date was to be 09.10.2015. However, in view of the fact that the respondent No.6 has filed CM No.12426/2015 for vacation of the stay, we have taken up the hearing of the stay application CM No.9798/2015 filed by the appellant as also the appeal.
  3. The facts of the case are that the appellant (an Indian Company) had entered into an agreement with the respondent No.2 (based in USA) for the purchase of timber. The appellant had, therefore, opened a letter of credit (documentary credit No.503 FLC002413/14). The said letter of credit was for an amount of US $58950. The respondent No.1 was the issuing bank and the respondent No.6 was the advising and negotiating bank.
  4. The said letter of credit, inter alia, stipulated the conditions with regard to the documents required. The documents required were as under:-

“46A: Documents Required

  1. SIGNED COMMERCIAL INVOICES IN 1 ORIGINAL AND 1 COPY CERTIFIFIYG THAT THE GOODS ARE AS PER SALES CONTRACT NOAT/2014-001 DATED 14-JUN-2014
  2. CERTIFICATE OF ORIGIN IN DUPLICATE
  3. FULL SET OF ORIGINAL CLEAN „ON BOARD‟ OCEAN BILLS OF LADING MADE OUT TO ORDER OF ING VYSYA BANK LTD, TRADE FINANCE UNIT, 23 BARAKHAMBA ROAD, NARAINMANZIL, NEW DELHI-

110 001, INDIA MARKED „FREIGHT PREPAID‟ NOTIFY APPLICANT WITH APPLICANT‟S FULL NAME AND ADDRESS.

SHORT FORM BILL OF LADING

NOT     ACCEPTABLE.BL   TO

MENTION.”

  1. The case of the appellant is that the respondent No.2 has committed a fraud upon the appellant by (a) not shipping the full quantity of the goods; and (b) by shipping sub-standard goods. For this reason, the appellant had sought an injunction restraining the respondent No.1 from releasing any payment under the said letter of credit to the respondent No.6 (the negotiating bank). It may be pointed out that the documents were presented by the respondent No.2 (beneficiary) to the respondent No.6 (negotiating bank), in the first instance, on 18.07.2014, in respect of one shipment for an amount of US $38,502.77. The documents which were presented to the respondent No.6 on 18.07.2014 were verified against the conditions stipulated in the letter of credit and were found to be in order by the respondent No.6 and the beneficiary (respondent No.2) was paid the said amount by the respondent No.6 on 21.07.2014. The documents in respect of the second shipment for the value of US $18941 were presented to the respondent No.6 on 30.07.2014 and after the respondent No.6 found the said documents to be in order, the payment was released on 31.07.2014.
  2. The suit was filed by the appellant in December 2014 and, as pointed out above, an order was passed on 29.12.2014, whereby the respondent No.1 was injuncted from making the payment under the letter of credit to the respondent No.6. That order was vacated by the impugned order dated 14.05.2015, against which, the appellant is in appeal before us.
  3. The law with regard to letters of credit is quite well settled. The bank negotiating the documents is not concerned with the underlying contract between the seller and the purchaser nor is it concerned with the goods. The bank only has to see whether the documents presented to it are in terms of the letters of credit or not. Once the bank finds that the documents are not discrepant, it is bound to release the payment to the beneficiary.
  4. The Supreme Court, in a recent decision in the case of National Bank Ltd. V. Ghanshaym Das Agarwal: (2015) 4 SCC 228 held as under:-

“7. As we see it, therefore, keeping in perspective that the Importer’s Bank i.e. the appellant before us, should not have certified the documentation, reasonably anticipating or being aware of the possibility that this certification could be abused. Law assures the exporter and its Bank to repose in the expectation, nay, certainty, that the consignment, which is the subject-matter of the letter of credit, is not usurped by the importer/consignee or its agents, without remitting payment to the consignor’s Bank. This is a strict liability cast on the bank which opens the letter of credit, since otherwise international trade and commerce will virtually and indubitably come to a standstill. It is only when irretrievable injury is bound to result and it is plainly evident that there is egregious fraud strictly ascribable to the beneficiary of the LC, that a reason to insulate a party before it against liability and that too, comes about only through the prompt intervention and interdiction of a Court of law. This Court has consistently adhered to this position of law even through the passage of several decades. The LC has the effect of creating a bargain between the banker and the vendor of goods, a deemed nexus between the seller and the issuing Bank, rendering the latter liable to the seller to pay the purchase price or to accept a bill of exchange upon tender of the documents envisaged and stipulated in the LC (See Tarapore and Co. vs. V.O. Tractors Export, [(1969) 1 SCC 233 : AIR 1970 SC 891] where Halsbury’s Law of England have been relied upon). These observations have been repeated in United Commercial Bank vs. Bank of India [(1981) (2) SCC 766] , U.P. Coop. Federation Ltd. vs. Singh Consultants & Engineers (P)Ltd. [(1988) 1 SCC 174], Federal Bank Ltd. vs. V.M. Jog Engg. Ltd. [(2001) 1 SCC 663], Himadri Chemicals Industries Ltd. vs. Coal Tar Refining Co. [(2007) 8 SCC 110]. The opening bank must only look to assure itself that the invocation is in terms of the LC, and the completion of this exercise has consistently been circumscribed to a short period, which in the case in hand is one week as per Article 13-B of UCP, 500.”

  1. In Tarapore & Co. v. V.O. Tractors Export: (1969) 1 SCC 233, the Supreme Court noted scope of an irrevocable letter of credit as explained in Halsbury‟s Laws of England and Chalmers on Bills of Exchange as follows:-

 

“12. The scope of an irrevocable letter of credit is explained thus in Halsbury’s Laws of England (Vol. 34), para 319 at p.185):

“It is often made a condition of a mercantile contract that the buyer shall pay for the goods by means of a confirmed credit, and it is then the duty of the buyer to procure his bank, known as the issuing or originating bank, to issue an irrevocable credit in favour of the seller by which the bank undertakes to the seller, either directly or through another bank in the seller’s country known as the correspondent or negotiating bank, to accept drafts drawn upon it for the price of the goods, against tender by the seller of the shipping documents. The contractual relationship between the issuing bank and the buyer is defined by the terms of the agreement between them under which the letter opening the credit is issued; and as between the seller and the bank, the issue of the credit duly notified to the seller creates a new contractual nexus and renders the bank directly liable to the seller to pay the purchase price or to accept the bill of exchange upon tender of the documents. The contract thus created between the seller and the bank is separate from, although ancillary to, the original contract between the buyer and the seller, by reason of the bank’s undertaking to the seller, which is absolute. Thus the bank is not entitled to rely upon terms of the contract between the buyer and the seller which might permit the buyer to reject the goods and to refuse payment therefor; and, conversely the buyer is not entitled to an injunction restraining the seller from dealing with the letter of credit if the goods are defective.”

“13. Chalmers on “Bills of Exchange” explains the legal position in these words:

“The modern commercial credit serves to interpose between a buyer and seller a third person of unquestioned solvency, almost invariably a banker of international repute; the banker on the instructions of the buyer issues the letter of credit and thereby undertakes to act as paymaster upon the seller performing the conditions set out in it. A letter of credit may be in any one of a number of specified forms and contains the undertaking of the banker to honour all bills of exchange drawn thereunder. It can hardly be overemphasised that the banker is not bound or entitled to honour such bills of exchange unless they, and such accompanying documents as may be required thereunder, are in exact compliance with the terms of the credit. Such documents must be scrutinised with meticulous care, the maxim de minimis non curat lex cannot be invoked where payment is made by letter of credit. If the seller has complied with the terms of the letter of credit, however, there is an absolute obligation upon the banker to pay irrespective of any disputes there may be between the buyer and the seller as to whether the goods are up to contract or not.”

  1. The Supreme Court in Tarapore & Co. (supra) further observed that:-

“There is this to be remembered, too. A vendor of goods selling against a confirmed letter of credit is selling under the assurance that nothing will prevent him from receiving the price. That is of no mean advantage when goods manufactured in one country are being sold in another. It is, further more, to be observed that vendors are often reselling goods brought from third parties. When they are doing that, and when they are being paid by a confirmed letter of credit, their practice is – and I think it was followed by the defendants in this case – to finance the payments necessary to be made to their suppliers against the letter of credit. That system of financing these operations, as I see it, would break down completely if a dispute as between the vendor and the purchaser was to have effect of “freezing”, if I may use that expression, the sum in respect of which the letter of credit was opened.”

  1. In United Commercial Bank v. Bank of India : (1981) 2 SCC 766, the Supreme Court observed as under:-

“32. Banker’s commercial credits are almost without exception everywhere made subject to the code entitled the “Uniform Customs and Practices for Documentary Credits”, by which the General Provisions and Definitions and the Articles following are to “apply to all documentary credit and binding upon all parties thereto unless expressly agreed”. A banker issuing or confirming an irrevocable credit usually undertakes to honour drafts negotiated, or to reimburse in respect of drafts paid, by the paying or negotiating intermediate banker and the credit is thus in the hands of the beneficiary binding against the banker. The credit contract is independent of the sales contract on which it is based, unless the sales contract is in some measure incorporated. Unless documents tendered under a credit are in accordance with those for which the credit calls and which are embodied in the terms of the paying or negotiating bank, the beneficiary cannot claim against the paying bank and it is the paying bank’s duty to refuse payment.”

  1. In United Commercial Bank (supra), it was also held as under:-

“34. The authorities are uniform to the effect that a letter of credit constitutes the sole contract with the banker, and the bank issuing the letter of credit has no concern with any question that may arise between the seller and the purchaser of the goods, for the purchase price of which the letter of credit was issued. There is also no lack of judicial authority which lay down the necessity of strict compliance both by the seller with the letter of credit and by the banker with his customer’s instructions.”

  1. The Supreme Court, in the case of Federal Bank Ltd. v. V.M. Jog.

Engg. Ltd., (2001) 1 SCC 663 held that:-

“55. In several judgments of this Court, it has been held that courts ought not to grant injunction to restrain encashment of bank guarantees or letters of credit. Two exceptions have been mentioned – (i) fraud and (ii) irretrievable damage. If the plaintiff is prima facie able to establish that the case comes within these two exceptions, temporary injunction under Order 39, Rule 1 CPC can be issued. It has also been held that the contract of the bank guarantee or the letter of credit is independent of the main contract between the seller and the buyer. This is also clear from Articles 3 and 4 of UCP (1983 Revision). In case of an irrevocable bank guarantee or letter of credit the buyer cannot obtain injunction against the banker on the ground that there was a breach of the contract by the seller. The bank is to honour the demand for encashment if the seller pima facie complies with the terms of the bank guarantee or letter of credit, namely, if the seller produces the documents enumerated in the bank guarantee or the letter of credit. If the bank is satisfied on the face of the documents that they are in conformity with the list of documents mentioned in the bank guarantee or the letter of credit and there is no discrepancy, it is bound to honour the demand of the seller for encashment. While doing so it must take reasonable care. It is not permissible for the bank to refuse payment on the ground that the buyer is claiming that there is a breach of contract. Nor can the bank try to decide this question of breach at that stage and refuse payment to the seller. Its obligation under the document having nothing to do with any dispute as to breach of contract between the seller and the buyer……”

(underlining added)

  1. Again in Himadri Chemicals Industries Ltd. v. Coal Tar Refining Co.: (2007) 8 SCC 110, the Supreme Court held as under:-

“14. From the discussions made hereinabove relating to the principles for grant or refusal to grant of injunction to restrain enforcement of a bank guarantee or a letter of credit, we find that the following principles should be noted in the matter of injunction to restrain the encashment of a bank guarantee or a letter of credit :

(i) While dealing with an application for injunction in the course of commercial dealings, and when an unconditional bank guarantee or letter of credit is given or accepted, the beneficiary is entitled to realise such a bank guarantee or a letter of credit in terms thereof irrespective of any pending disputes relating to the terms of the contract.

(ii) The bank giving such guarantee is bound to honour it as per its terms irrespective of any dispute raised by its customer.

(iii) The Courts should be slow in granting an order of injunction to restrain the realization of a bank guarantee or a letter of credit.

(iv) Since a bank guarantee or a letter of credit is an independent and a separate contract and is absolute in nature, the existence of any dispute between the parties to the contract is not a ground for issuing an order of injunction to restrain enforcement of bank guarantees or letters of credit.

(v) Fraud of an egregious nature which would vitiate the very foundation of such a bank guarantee or letter of credit and the beneficiary seeks to take advantage of the situation.

(vi) Allowing encashment of an unconditional bank guarantee or a letter of credit would result in irretrievable harm or injustice to one of the parties concerned.”

(underlining added)

  1. In the present case, we find, prima facie, that the documents which were presented to the respondent No.6 on both occasions were not discrepant and were in conformity with the letters of credit. Therefore, our prima facie view is that the respondent No.6 was not wrong in releasing the payment to the beneficiary. That being the case, the appellant is not in a position, in law, to seek an order restraining the payment by the respondent No.1 to the respondent No.6 and thereby reimbursing the respondent No.6 for the payment made under the letter of credit issued at the instance of the appellant by the respondent No.1. The learned counsel for the respondent No.1 also has no objection to the release of the payment to the respondent No.6 and she states that the only reason why the payment has not been made is because of the injunction order. According to the respondent No.1 Bank also the documents are in order. The banks have no concern with the disputes between the purchaser (the appellant) and the seller (respondent No.2.). The alleged non-supply of the full quantity contracted or the alleged sub-standard quality of goods do not fall within the exception of fraud of an egregious nature and irretrievable injustice.
  2. In these circumstances, we not only vacate the order dated 22.05.2015 passed by us in CM No.9798/2015 but also dismiss the appeal preferred by the appellant. The result is that CM No.12426/2015 is allowed, the order dated 22.05.2015 stands vacated and FAO(OS) 283/2015 and CM No.9798/2015 are dismissed.
  3. The next date (i.e., 09.10.2015), which was fixed in the appeal, stands cancelled. There shall be no order as to costs.

 

BADAR DURREZ AHMED, J SANJEEV SACHDEVA

 

Who Can File  O.A. or Petition before the Central Administrative Tribunal (CAT)

  1. Jurisdiction, powers and authority of the Central Administrative Tribunal.—

(1) Save as otherwise expressly provided in this Act, the Central Administrative Tribunal shall exercise, on and from the appointed day, all the jurisdiction, powers and authority exercisable immediately before that day by all courts (except the Supreme Court 39 [***] in relation to—

(a) recruitment, and matters concerning recruitment, to any All-India Service or to any civil service of the Union or a civil post under the Union or to a post connected with defence or in the defence services, being, in either case, a post filled by a civilian;

(b) all service matters concerning—

(i) a member of any All-India Service; or

(ii) a person [not being a member of an All-India Service or a person referred to in clause (c)] appointed to any civil service of the Union or any civil post under the Union; or

(iii) a civilian [not being a member of an All-India Service or a person referred to in clause (c)] appointed to any defence services or a post connected with defence, and pertaining to the service of such member, person or civilian, in connection with the affairs of the Union or of any State or of any local or other authority within the territory of India or under the control of the Government of India or of any corporation 40 [or society] owned or controlled by the Government;

(c) all service matters pertaining to service in connection with the affairs of the Union concerning a person appointed to any service or post referred to in sub-clause (ii) or sub-clause (iii) of clause (b), being a person whose services have been placed by a State Government or any local or other authority or any corporation 40 [or society] or other body, at the disposal of the Central Government for such appointment. 40 [Explanation.—For the removal of doubts, it is hereby declared that references to “Union” in this sub-section shall be construed as including references also to a Union territory.]

(2) The Central Government may, by notification, apply with effect from such date as may be specified in the notification the provisions of sub-section (3) to local or other authorities within the territory of India or under the control of the Government of India and to corporations 40 [or societies] owned or controlled by Government, not being a local or other authority or corporation 40 [or society] controlled or owned by a State Government: Provided that if the Central Government considers it expedient so to do for the purpose of facilitating transition to the scheme as envisaged by this Act, different dates may be so specified under this sub-section in respect of different classes of, or different categories under any class of, local or other authorities or corporations 40 [or societies].

(3) Save as otherwise expressly provided in this Act, the Central Administrative Tribunal shall also exercise, on and from the date with effect from which the provisions of this sub-section apply to any local or other authority or corporation 40 [or society], all the jurisdiction, powers and authority exercisable immediately before that date by all courts (except the Supreme Court 39 [***]) in relation to—

(a) recruitment, and matters concerning recruitment, to any service or post in connection with the affairs of such local or other authority or corporation 40 [or society]; and

(b) all service matters concerning a person [other than a person referred to in clause (a) or clause (b) of sub-section (1)] appointed to any service or post in connection with the affairs of such local or other authority or corporation 40 [or society] and pertaining to the service of such person in connection with such affairs.

Section 28 in The Administrative Tribunals Act, 1985

  1. Exclusion of jurisdiction of courts except the Supreme Court under article 136 of the Constitution.—On and from the date from which any jurisdiction, powers and authority becomes exercisable under this Act by a Tribunal in relation to recruitment and matters concerning recruitment to any Service or post or service matters concerning members of any Service or persons appointed to any Service or post, 55 [no court except—

(a) the Supreme Court; or

(b) any Industrial Tribunal, Labour Court or other authority constituted under the Industrial Disputes Act, 1947 (14 of 1947) or any other corresponding law for the time being in force, shall have], or be entitled to exercise any jurisdiction, powers or authority in relation to such recruitment or matters concerning such recruitment or such service matters.

Only Govt. aggrieved persons can approached to the Central Administrative Tribunal ( CAT)

the Orissa Administrative Tribunal in Smt. Amitarani Khuntia Versus State of Orissa 1996. (1) OLR (CSR)-The Tribunal after considering the provisions of    the Act held that a private citizen or a stranger having no existing right to any post and not intrinsically concerned with any service matter is not entitled to approach the Tribunal.              The following passage in the judgement is relevant: “….A reading of the aforesaid provisions would mean that an application for redressal of grievances could be filed only by a ‘person aggrieved’ within the meaning of the Act.