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CASE NO.:

Appeal (civil) 4064 of 2003

PETITIONER:

S.D.S. SHIPPING PVT. LTD.

RESPONDENT:

JAY CONTAINER SERVICES CO. PVT. LTD. AND ORS.

DATE OF JUDGMENT: 08/05/2003

BENCH:

SHIVARAJ V. PATIL & ARIJIT PASAYAT

JUDGMENT:

JUDGMENT

2003 Supp(1) SCR 101

The Judgment of the Court was delivered by ARIJIT PASAYAT J. Leave granted.

Shorn of unnecessary details, the factual background giving rise to the

present appeal is as follows:-

Respondent no. 1 as plaintiff filed a suit in the ordinary original civil

jurisdiction of the Bombay High Court, inter alia, with the following

prayers:

"(a) That the Defendant No.l be ordered to pay the Plaintiffs a sum of

Rs.1,61,13,173.24 (Rupees one crore sixty one lakhs thirteen thousand one

hundred and seventy three and twenty four paise) details of which are given

in the enclosure at Annexure 'A' to this plaint and the Defendant No.l be

directed to pay interest @ 21% till the date of actual payment.

"(a-1) That Defendant No. 1 be ordered and decreed to pay a sum of US $

4140 per month alongwith interest @ 18% per annum from due date till

payment/realization with effect from 1st November, 1997 towards lease rent

until all the 92 containers are returned.

In the alternative and without prejudice:

"(a-2) If this Honourable Court holds that the Plaintiffs are not entitled

to claim lease rent beyond the termination of the lease agreement, in that

event Defendant No. 1 be ordered and decreed to pay a sum of US $ 4140 per

month with interest @ 18% per annum as liquidated damages to the

Plaintiffs."

Appellant is defendant no. I in the suit.

According to the plaintiff it is a private limited company engaged amongst

others in the business of supply of containers for the ships to carry goods

from one place to another. It supplied containers to the present appellant

from time to time. There was a lease agreement entered into between the

parties for use of leased containers. The agreement expired on 30th March,

1996; but was further extended by one month. Even during the extended

period and thereafter the containers were not returned by the defendant no.

1. It entered into correspondence with defendant no.l calling up it to

return the containers and to pay the lease charges. Cheques issued by the

said defendant bounced on presentation. The defendant no.l by letter dated

26th April, 1996 addressed to the attorneys of the plaintiff informed that

efforts were on to look for a suitable vessel to bring those containers

from Port Louis to Bombay. But the containers were not returned. Prior to

the said letter dated 26th April, 1996 by two communications dated 10th

January, 1996, it had been communicated that out of the total lot of 92, 35

containers could not be returned. It was stated that those containers were

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lost leaving a balance of 57 containers. The containers were given on lease

basis and since there was no dispute about non-return, demands were made

for payment. There was also no dispute regarding lease rental. Ultimately,

when the plaintiff found that the containers were not returned and also the

lease charges were not paid, the suit No.4794 of 1997 was filed seeking a

sum of Rs.1,61,13,173.14. This included the claim for non-return of the

containers and the claim for outstanding rental. After the suit was filed,

plaintiff took out a motion, being Notice of Motion No. 378 of 1998 for

Receiver and injunction for the containers which were not returned. The

learned Single Judge by order dated 11th August. 1999, took the view that

there was no case for appointing a Receiver for the properties by way of

security for the amounts which may be due. He also held that no irreparable

loss will be caused if interim relief was not granted. While rejecting this

motion, however, liberty was granted to the plaintiff to take out the

appropriate proceedings for a direction to defendant no.l to deposit the

arrears of rent, if any, due. Order of the learned Single Judge was upheld

by the Division Bench. While disposing of the appeal, however, it was

observed by it that the view expressed by learned Single Judge were of

prima facie nature and were intended to dispose of the motion. It was

further observed that if the plaintiff moves a" application for attachment

before judgment, observations made in the order of learned Single Judge as

well as the Division Bench will not prejudice the application.

Thereafter another notice of motion was taken where it was prayed that

defendant no.l be directed to deposit the amount of Rs. 81,77,632.50 being

the amount towards arrears of rental and also for a direction that per

month an amount of Rs. 1,78,020 be deposited from time to time. Learned

Single Judge took the view that the power of the Court under Order 12 Rule

6 of Civil Procedure Code, 1908 (in short 'the Code') dealing with decree

on admission could not be invoked in the matter. It was held that Section

151 of the Code was not available to the plaintiff to invoke the inherent

jurisdiction on the facts of the case.

The orders were challenged by the plaintiff before the Division Bench which

by the impugned order directed defendant no.l to deposit an amount of

Rs.81,77,632.50 (rounded of to Rs. 82,00,000) within 12 weeks period. It

was further directed that the amount was to be deposited in a nationalized

bank for a period of 37 months and the deposit was to be renewed at a time

by 13 months until the suit was decided. This order is under challenge.

Mr. R.F. Nariman, learned senior counsel for the appellants submitted that

the Division Bench manifestly erred in directing deposit by overlooking the

factual and legal background involved. In a commercial suit where there was

dispute regarding the liability such directions could not have been given.

Even in respect of a summary suit under Order 37 there was no scope for

giving the type of direction as done. The Division Bench while implicitly

upholding the view of learned Single Judge that Order 12 Rule 6 was not

applicable could not have applied the logic of Order 39 Rule 10 of the Code

which operates in an entirely different background. It was pointed out that

the Division Bench committed factual error in observing that there was no

clear denial to the claim of the plaintiff and/or that its stand was an

evasive one and at times in the nature of an afterthought. Having ruled out

application of Order 12 Rule 6, it was not open to the Division Bench to

bring in operation of Order 39 Rule 10, of the Code with the help of

Section 151. it was also submitted that the claim as made clearly

exaggerated, without any foundation or basis and neither in law nor equity

plaintiff was entitled to any relief.

It was, however, accepted that at the most the plaintiff may be entitled to

the arrears of rentals and nothing beyond that. The question of making any

payment for the rentals after expiry of the agreement period is also not

contemplated in law. There was no termination of the agreement and on the

contrary it lost it currency after the extended period of one month beyond

the initially stipulated last date.

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Responding to the above submissions. Mr. K.K Venugopal, learned senior

counsel for the plaintiff (respondent no. 1) submitted that here is a case

where the party has taken advantage of its own wrong doings. Undisputedly

it had taken the containers on lease. Clause 6 of the agreement clearly

stipulates that rental charges were to be paid till the containers are

returned. This has admittedly not been done. There are several letters

where there was express acceptance of the liability. Finally it was

submitted that this is not a case where this Court should exercise powers

under Article 136 of the Constitution of India. 1950 ( in short "the

Constitution').

By way of reply to the submissions made by Mr. Venugopal, Mr. Nariman

submitted that the scope and ambit of Article 136 is too well known and,

therefore, where substantial question of law relating to jurisdiction of a

commercial court is raised, 'he Court has to see whether the impugned

judgment meets the requirement of law. According to him, it is too futile

to contend that Article 136 will not be exercised in a case of this nature

where the Division Bench of the High Court clearly acted contrary to well

settled principle of law.

Few facts of relevance need to be noted in view of the rival stands.

Undisputedly, the order impugned is an interim order. The direction is for

deposit and no liberty has been granted to the plaintiff for withdrawal

after the deposit. As noted supra, there was no serious dispute relating to

the claim for arrears of rentals. Admittedly, 92 containers were leased out

by the plaintiff to the defendant no.l according to whom some of the

containers were not traceable and were lost. We may add here that

subsequent to the filing of the suit, it was contended that all the 92

vessels were lost. In view of the factual scenario unfolded above, it does

not appear to be a case where interference under Article 136 of the

Constitution is called for. That power is exercised only on showing

substantial injustice, and not for merely technical flaws in a proceeding,

(See Shahoodul Haque v The Registrar, Co-operative Societies, Bihar and

Anr., [1975] 3 SCC 108 The position was illuminatingly stated in Rashpal

Malhotra v. Mrs. Satya Rajput and Anr., [1987] 4 SCC 391. This Court in

Heavy Engineering Corporation Ltd v. K. Singh and Co., Ranchi, AIR (1977)

SC 2031 e-pressed the opinion that although the powers of this Court were

wide under Article 136, it could not be urged that because leave had been

granted the court must always in every case deal with the merits, even

though it was satisfied that the ends of justice did not justify its

interference in a given case. It is not as if, in an appeal with leave

under Article 136, this Court was bound to decide the question if on facts

at the later hearing the Court felt that the ends of justice did not make

it necessary to decide the point. Similarly in Baigana v Deputy Collector

of Consolidation, [1978] 3 SCR 509 it was held that this Court was more

than a court of appeal. It exercises power only when there is supreme need.

It is not the fifth court of appeal, but the final Court of the nation.

Therefore, even if legal flaws might be electronically detected, it may not

interfere save manifest injustice or substantial question of public

importance.

In Taherakhatoon (D) By Lrs. v. Salambin Mohammad, [1999] 2 SCC 635 it was

noted that even in cases where leave has been granted, the Court might

after declaring the correct legal position decline to interfere saying that

it would not exercise discretion to decide the case on merits and that it

would decide on the basis of the equitable considerations in the facts and

circumstances of the case and mould the final order.

Even if it is accepted for the sake of arguments that there was some faulty

conclusion in law, the impugned order being an interim one, we do not

consider this to be fit case for interference in exercise of jurisdiction

under Article 136. But, taking note of the peculiar facts, ends of justice

would be best served if the appellant is directed to deposit Rupees Fifty

lacs instead of Rupees Eighty two lacs by end of June, 2003.

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The appeal is accordingly disposed of leaving the parties to hear their

respective costs.