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1985 DIGILAW 379 (KAR)

SOUTHERN STEELMET AND ALLOYS LIMITED v. LAKSHMI NIVAS MITTAL

1985-08-20

N.VENKATACHALA

body1985
N. VENKATACHALA, J. ( 1 ) BY consent of learned Counsel, this revision petition was treated as having been posted for hearing and heard. ( 2 ) THE petitioner, a company, was defendant-1 in a suit, O. S. No. 3288/81, on the file of the Court of XVI Additional city Civil Judge at Bangalore (for short 'the Court')- Respondent-1 here, a share-holder of that company, was the plaintiff in that suit, while respondents 2 to 6 here, Directors of that Company, were defendants 2 to 6 therein. The object of the said suit of respondent-1 was to obtain a declaration invalidating a resolution dated 15-11-1980 of the Board of directors of the petitioner-Company relating to issue of fresh equity shares of the company, and Bother consequential reliefs. For instituting that suit on behalf of, and for the the benefit, of other Share- holders of the petitioner-Company, respon- dent-1 filed an interlocutory application, i. A. I, therein seeking thecourt's permission therefore under clause (a) of Rule 8 of order 1 of the Code of Civil Procedure, 1908 (for short 'the Code' ). The Court, by its order dated 12-11-1981, allowed that application without issuing any prior notice thereon either to the other share- holders of the Company or to the defendants in the suit the validity of that order has been questioned in this revision petition, by defendant-1 in the suit. ( 3 ) IT was the contention of Shri H. B. Datar, learned Counsel for defendant-1 (petitioner), that I. A. I in the suit, by which the plaintiff (respondent-1) had sought permission to institute the suit against the defendants (petitioner and respondants 2 to 6) on behalf of, and for the benefit of, other Shareholders of petitioner-Company, could not have been allowed by the Court without issuing prior notice to such Shareholders and defendants. According to him, clause (a) of sub-rule (1) of Rule 8 of order 1 of the Code required issue of prior notice and hence the order of the court made on I. A. I, without issuing such notice, stands vitiated. He sought to seek support for his contention from the decision of the Bombay High court in The Municipal Council Amara- vathi v. Govind Vishnu Sarnaik and others (AIR 1979 Bombay 401 ). He sought to seek support for his contention from the decision of the Bombay High court in The Municipal Council Amara- vathi v. Govind Vishnu Sarnaik and others (AIR 1979 Bombay 401 ). ( 4 ) ON the other hand, it was contended by Shri Padubidri Raghavendra rao, learned Counsel, whose assistance was sought in this revision petition, that the express language of clause (a) of sub- rule (1) of Rule 8 of Order 1 of the Code, did not require the Court to issue prior notice before grant of permission there-under, nor such requirement could be implied in the setting of the provisions in which that clause finds its place. According to him, when clause (a) did not contemplate isnue of prior notice by the Court before grant or permission thereunder, the order of the Court allowing I. A. I without issue of such notice, does not stand vitiated. ( 5 ) SUB-RULE (1) of Rule 8 of order 1 of the Code, in which clause (a) finds its place, and sub-rules (2) and (3) of that Rule 8, may be set out at the outset for a proper appreciation of the above rival contentions of learned counesl. They read :"8 (1) Where there are numerous persons having the same interest in one suit,- (a) one or more of such persons nay, with the permission of the court, sue or be sued, or may defend such suit, on behalf of, or for the benefit of, all persons so interested; (b) the Court may direct that one or more of such persons may sue or be sued, or may defend such suit, on behalf of, or for the benefit of all persons so interested, (2) The Court shall, in every case where a permission or direction is given under sjub-rule (1), at the plaintiff's expense, give notice of the institution of the suit to all persons so interested, either by personal service, or where, by reason of the number of persons or any other cases, such service is not reasonably practicable, by public advertisement, as the Court in each case may direct. (3) Any person on whose behalf, or for whose beneft, a suit is instituted, or defended, under sub-rule (1) may apply to the Court to be made a party to such suit". (3) Any person on whose behalf, or for whose beneft, a suit is instituted, or defended, under sub-rule (1) may apply to the Court to be made a party to such suit". ( 6 ) CLAUSE (a) of sub-rule (1) above, as seen there from, enables one or more of numerous persons having the same interest in one suit, to sue or be sued or defend when sued, on behalf of, or for the benefit of, all persons so interested, with the permission of the Court. Clause (b) thereof, as seen therefrom, however, empowers the Court to direct, on its own motion (suo moto), one or more of numerous persons having the same interest in one suit, to sue or be sued or defend when sued, on behalf of, or for the benefit of, all persons so interested. From these clauses, it becomes clear that one or more of numerous persons having the same interest in one suit, can represent the remaining persons having the same interest in that suit either with the permission of the Court or as directed by the Court. ( 7 ) WHETHER or not prior notice under Clause (a) above is required to be issued by the Court before grant of Permission there-under, is the controversy which calls to be resolved now. The express language in clause (a) above, as is apparent therefrom, does not require issue of prior notice before grant of permission thereunder. Then, can such a requirement be implied in the setting of the provisions in which clause (a) finds its place. Such requirement, in my view, cannot implied for the reasons which I shall presently state. ( 8 ) CLAUSE (b) above, which finds its place next to clause (a) above, while empowers the Court, on its own motion, to direct one or more of numerous persons having the same interest in one suit, to represent others having the same interest in that suit, does not repuire issue of Prior notice before giving a direction therefor. When the purpose sought to be achieved by clause (b) above is the same as the onesought to be achieved by clause (a) above, it would be incongruous to hold that clause (a) requires issue of prior notice, while clause (b) does not require issue of such notice. When the purpose sought to be achieved by clause (b) above is the same as the onesought to be achieved by clause (a) above, it would be incongruous to hold that clause (a) requires issue of prior notice, while clause (b) does not require issue of such notice. If issue of prior notice under clause (a) or clause (b) before grant of permission or issue of direction, as the case may be, was really intended by the Legislature, sub-rule (2) of Rule 8, which finds its place next to sub rule (1) where clauses (a) and (b) find their places, could not have made the requirement of issue of notice subsequent to grant of permission under clause (a) or issue of direction under clause (b), of sub-rule (1), mandatory. Sub-rule (2), it cannot be overlooked, requires that the Court shall, in every case where a permission or direction is given under sub-rule (1), at the plaintiff's expense, give notice of the institution of the suit to all persons so interested, either by personal service, or, where, by reason of the number of persons or any other cause, such service is not reasonably practicable, by public advertisement, as the Court in each case may direct Why issue of subsequent notice by the Court under sub-rule (2) above is made obligatory, becomes obvious from sub-rule (3) above, in that, it enables any person on whose behalf, or for whose benefit, a suit is instituted or defended under sub-rule (1) to apply to the Court to be made a party to such suit. When sub-rule (3) above enables any person on whose behalf, or for whose benefit, a suit is instituted or defended under sub- rule (1) to apply to the Court to become a party to such suit, either as plaintiff to support the suit or as defendant to oppose the suit, it is difficult to think that any useful purpose would be served by issue of prior notice to such person before either grant of permission under clause (a) or issue of direction under clause (b), of sub-rule (1) of Rule 8 of order 1 of the Code. Issue of prior notice befor grant or permiasion under clause (a} for issue of direction under clause (b), of sub-rule (1), if anything, may give an undue handle to the opposite parties to delay or defeat the suit or defence, as the case may be, at the very threshold. Besides, non-issue of prior notice to the persons who may be interested in opposing the grant of permission under clause (a) or issue of direction under clause (b), of sub-rule (1), cannot adversely affect their interest in as much as a decree passed in a suit under rule 8 would be binding under sub-rule (6)thereof, on all persons on whose behalf, or for whose benefit, the suit is instituted or defended, as the case may be, only when notice required under sub-rule (2) is issued, and not otherwise. Thus, from a conspectus of the above sub-rules of Rule 8. I am inclined to take the view that no prior notice under clause (a) of sub-rule (1) of Rule 8 is required to be issued by the Court before grant of permission thereunder. ( 9 ) COMING to the decision of the bombay High Court in Amaravati Municipal Council's case (supra), it is, no doubt, held therein that sub-rule (1) of Rule 8 of Order 1 of the Code required prior notice before grant of permission contemplated therein, as pointed out by Shri Datar. The Bombay High Court has held so on the interpretat:on of sub-rule (1) of Rule 8 of Order 1 of the Code, as it stood before its substitution by the Code of civil Procedure (Amendment) Act, 1976 (for short 'the Amendment Act'), which came into force on 1-2-1977. The sub-rule as it stood then, read thus :"8 (1 ). Where there are numerous persons having the same interest in the suit, one or more of such persons may, with the permission of the Court, sue or be sued, or may defend, in such suit on behalf of or for the benefit of all persons so interested. But, the Court shall in such case give, at the plaintiff's expense, notice of the institution of the suit to all such persons either by personal service or where from the number of persons or any other cause such service is not reasonably practicable, by public advertisement, as the Court in each case may direct. But, the Court shall in such case give, at the plaintiff's expense, notice of the institution of the suit to all such persons either by personal service or where from the number of persons or any other cause such service is not reasonably practicable, by public advertisement, as the Court in each case may direct. "the Bombay High Court, for holding that prior notice was to be given by the court under sub-rule (1) above before it granted permission thereunder, interpreted the word 'but' found in the sub-rule to mean 'except', 'unless' or 'if not'. Such interpretation led it to conclude that it was incumbent upon the Court to give notice of the institution of the suit to all persons interested in such suit before it could accord permission to sue in a representative capacity under that sub-rule. It is of significance to note that the word 'but' found in sub-rule (1) of rule 8 of Or. 1 of tha Code as it stood before it was substituted by the Amendment Act, no longer finds a place in the setting of sub-rules (1) and (2) of Rule 8. The omission of the word 'but' in the substituted sub-rule (2) of Rule 8 is sufficient to indicate that the notice contemplated under sub-rule (2) need not precede grant of permission under clause (a) or issue of direction under clause (b), of sub-rule (1) of rule 8, as it stands substituted by the amendment Act. Hence, the decision of the Bombay High Court can lend no assistance in interpretation of sub rules (1) and (2) of Rule 8 , as they stand sub-stituted by the Amendment Act. ( 10 ) IN conclusion, I hold that clause (a) of sub-rule (1) of Rule 8 of Order 1 of the Code does not require a Court to issue prior notice before it grants permission thereunder. From this it follows that the order under revision does not call for interference. ( 11 ) IN the result, I dismiss this revesion petition, however, without costs. ( 12 ) THE records of the Court below may be sent back forthwith. ( 13 ) BEFORE parting with the case, I place on record my appreciatson to the assistance of Shri Padubidri Raghavendra rao, learned Counsel, rendered at my request. --- *** --- .