Ganpat Rai Hiralal And Another vs Aggarwal Chamber Of Commerce

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Not extracted

Decision Date: 24 October 1952

Coram: N. Chandrasekhara Aiyar, Mehr Chand Mahajan, Natwarlal H. Bhagwati

In the matter titled Ganpat Rai Hiralal and Another versus Aggarwal Chamber of Commerce Ltd., the Supreme Court rendered its decision on 24 October 1952. The judgment was authored by Justice N. Chandrasekhara Aiyar, who sat on the bench together with Justices Mehr Chand Mahajan and Natwarlal H. Bhagwati. The petitioners were identified as Ganpat Rai Hiralal and another individual, while the respondent was Aggarwal Chamber of Commerce Ltd., with the additional parties Murari Lal, Hari Ram V., and Marwar appearing in the proceedings. The citation for this decision is recorded as 1952 AIR 409 and 1953 SCR 752, and it is also referenced in subsequent reports including E 1957 SC 540, R 1963 SC 221, among others.

The issues before the Court involved the interpretation of provisions of the Pepsu Ordinance (X of 2005), specifically sections 52 and 116, and their interaction with the Patiala States Judicature Farman of 1999. The Court examined whether a certificate of fitness was required for appeals, the circumstances under which such a certificate was necessary, and the effect of legislative change on vested rights of appeal. The Pepsu Ordinance, enacted in 1948-1949, was described as a transitory regulation intended to facilitate the transfer of proceedings from courts of a covenanting State to courts of similar status in the Union, allowing those proceedings to continue without being treated as brand-new cases. The provision contemplated a notional commencement of the proceedings in the new courts, preserving all rights that had arisen or were likely to arise in the future. The Court emphasized that the Ordinance did not intend to retrospectively extinguish any vested right of appeal.

According to the Patiala States Judicature Farman of 1999, a certificate was required only for an appeal to a Division Bench from an order of a single judge of the Patiala High Court when the appeal concerned judgments or orders made under civil appellate jurisdiction. By contrast, the Pepsu Ordinance of 2005 mandated that a certificate of fitness be obtained in every case. The Court considered three specific appeals: Appeal No. 152 involved an application filed on 2 February 1950 seeking amendment of a liquidation order dated 1946; that application was dismissed, and a subsequent appeal to a Division Bench was rejected on 1 May 1950 for lack of a certificate. Appeals Nos. 167 and 167A related to payment orders issued on 18 January 1949; both appeals were dismissed on 3 March 1949 for the same deficiency.

In its holding, the Court determined that a petition for amendment of an earlier order constituted an independent proceeding, albeit connected to the original order, and therefore was to be governed by the law in force on the date of the petition. Consequently, the applicable law was the Pepsu Ordinance of 2005, which required a certificate of fitness. Accordingly, the dismissal of the appeal in Appeal No. 152 for want of a certificate was affirmed.

The Court held that the dismissal of the appeal to the Division Bench because no certificate had been produced was correct. It further held that for Appeals Nos. 167 and 167-A the law applicable on the dates concerned was the Patiala States Judicature Farman of 1999, under which the appellants possessed a vested right to contest the payment order without obtaining a certificate. The Court explained that such a vested right could not be withdrawn by a later change in the law unless the later enactment expressly, or by necessary implication, operated retrospectively and thereby removed the right. The Court found that section 116 of the Ordinance contained no indication that it was intended to have retrospective effect. Consequently, the High Court’s order dismissing the appeals as incompetent was declared erroneous. The judgment referred to the authority of Colonial Sugar Refining Company v. Irving [1905] A.C. 369.

The matter fell under civil appellate jurisdiction, involving Civil Appeals Nos. 152, 167 and 167-A of 1951. The appeals were taken from judgments dated 25 April and 1 May 1950 of the High Court of Judicature for Patiala and East Punjab States Union at Patiala, rendered by Chief Justice Teja Singh and Justice Chopra, in T. P. A. R. I. A. O. No. 34 of 1950 and Civil Appeals Nos. 493/494 of Samwat 2005. Counsel for the appellants in Appeals Nos. 167 and 167-A comprised a senior advocate assisted by another lawyer, while counsel for the appellant in Appeal No. 152 was another senior counsel. Counsel for the respondents in the two sets of appeals were respectively represented by a senior advocate and a junior advocate. The judgment was delivered on 24 October 1952 by Justice Chandrasekhara Aiyar. The Court noted that the three appeals were connected by a common question of law and had been placed before it on special leave granted by the Pepsu High Court at Patiala under sub-clause (e) of clause (1) of article 133 of the Constitution. The factual backdrop differed between Appeal No. 152 and the other two appeals. The proceedings originated from the liquidation of two entities, the Marwari Chamber of Commerce Ltd. (relevant to Appeal No. 152) and the Aggarwal Chamber of Commerce Ltd. (relevant to Appeals Nos. 167 and 167-A). The Official Liquidator had prepared the list of contributories, and after various objections raised before the Liquidation Judge on both legal and merit grounds, payment orders were issued on 4 June 1946 in the first case and on 18 January 1949 in the latter two. The validity of the payment order in Appeal No. 152 was challenged before the High Court by the Official Liquidator and a contributory. The Liquidation Judge’s order was amended in favour of the Liquidator, increasing the amount payable from Rs 4,762-13-3 to Rs 24,005-7-3. The matter was subsequently taken on further appeal by the contributory to the Judicial Committee.

In the matter that arose from the liquidation proceedings, the Court observed that the appeal presented to the Division Bench had been filed after the prescribed period and was therefore barred by time; consequently the Division Bench’s judgment was set aside and the original order of the Liquidation Judge was reinstated on 6 December 1949. In the two related appeals concerning the Aggarwal Chamber of Commerce Ltd., the Liquidation Judge initially granted an application seeking the removal of the contributory’s name, but that order was reversed by a Division Bench of the High Court upon further appeal. The company then appealed to the Judicial Committee of Patiala, which remanded the case for a fresh trial; after the remand the Liquidation Judge issued a payment order directing the payment of Rs 8,191-0-9 on 18 January 1949, as previously noted. Subsequently, on 2 February 1950, the firm identified as Murari Lal-Hari Ram, the appellant in Civil Appeal No. 152 of 1951, filed an application under section 152 of the Civil Procedure Code seeking to amend the order of the Liquidation Judge, Kartar Singh J. The applicant contended that the order contained a clerical or arithmetic mistake because the amount shown as due, Rs 24,005-7-3, was the result of an accidental slip and the correct amount should have been Rs 21,805-7-3. The learned Judge dismissed this amendment application on 16 March 1950. The appellant then applied to the same Judge for a certificate authorising leave to appeal, but the request was also refused. An appeal was filed against the order dismissing the amendment petition; however, the appeal was rejected on the ground that it lacked the required certificate from the Single Judge. The order dated 1 May 1950 contained the following reasoning: “We have recently held in Ganpat Rai Hira Lal v. Aggarwal Chamber of Commerce, Ltd., L.P.A. Nos. 493 and 494 of Samvat 2005 (Pepsu) that no appeal lies from an order of a Single Bench to a Division Bench without a certificate by the Single Judge that the case is a fit one for further appeal. In this case it is admitted that the appellants made an application for a certificate to the Single Bench, from whose decision he is appealing, but the same was refused. The appeal is therefore not competent and is dismissed in limine.” The order further explained that the reference to the Ganpat Rai case concerned a decision of the High Court in the connected matter that gave rise to Appeals Nos. 167 and 167-A of 1951, where an appeal from the Liquidation Judge’s payment order had likewise been dismissed for want of a certificate from the Single Judge. In Civil Appeal No. 152 of 1951, the appellant argued that a certificate from the Single Judge was unnecessary because the governing law was not Ordinance X of 2005 of the Patiala State but the Patiala State’s Judicature Farman Shahi, 1999 Bikarmi, which does not require such a certificate. The Court noted that under section 44 of the earlier Farman a

The Court observed that a certificate stating that a case is fit for appeal is required only when the judgment, decree, or order sought to be appealed is made in the exercise of civil appellate jurisdiction. It was further held that this provision did not govern the present matter. The amendment application had been filed on 2 February 1950, as previously noted. Under the Civil Procedure Code there is no provision for an appeal from an order that amends or refuses to amend a judgment, decree or order, although an appeal may lie from the amended decree or order itself. The Court rejected the view that the amendment petition was a continuation of the suit or proceedings in which it arose. Instead, it described the petition as an independent proceeding, though connected with the order whose amendment was sought. Consequently, the law applicable to the petition was the law in force on the date of its filing, namely the law of the Patiala and East Punjab States Union (Pepsu) as embodied in Ordinance X of 2005. Section 52 of that Ordinance requires a certificate, and the Court reproduced the provision in full: “Subject to any other provision of law, an appeal shall lie to the High Court from a judgment, decree or order of one Judge of the High Court and shall be heard by a Bench consisting of two Judges of the High Court: Provided that no such appeal shall lie to the High Court unless the Judge who decides the case or, in his absence, the Chief Justice certifies that the case is a fit one for appeal.” The Court then considered the appellant firm’s position and found that no vested right of appeal existed that could be taken away by giving retrospective effect to the Ordinance that came into force in August 1948. Accordingly, the High Court’s order that an appeal does not lie from an order of a single Judge without a certificate from that Judge was affirmed as correct. The Court subsequently examined the two other appeals, numbered 167 and 167-A of 1951, where different considerations applied. The payment order of the Liquidation Judge was dated 18 January 1949 and the appeal was preferred on 19 February 1949. Because of uncertainty on the issue, the appellants applied for a certificate, which was refused on 3 March 1949. At that time the Patiala States Judicature Farman of 1999 was in force, and under that law the appellants possessed a right of appeal from the payment order without a certificate. The Court held that this right could not be removed by a subsequent change in law unless the later enactment expressly or by necessary implication provided for retrospective effect. The High Court judges had conceded this point, but they believed that section 116 of Ordinance X of 2005 (1948-49) contained an express contrary provision. The Court quoted that section as follows: “Notwithstanding anything contained in this Ordinance, all suits, appeals, revisions, applications, reviews, executions and …”

The Court examined the provision which stated that “other proceedings, or any of them, whether civil or criminal, pending in the Courts and before judicial authorities in any Covenanting State shall be continued and concluded respectively in Courts or before judicial authorities of the like status in the Union; and the Courts or authorities in the Union shall have the same jurisdiction in respect of all such suits, appeals, revisions, reviews, executions, applications and other proceedings, or any of them, as if the same had been duly commenced and continued in such Courts or before such authorities.” The Court observed that this language clearly constituted a transitory regulation intended to transfer cases from the courts of the Covenanting State to courts of comparable status in the Union and to allow those cases to proceed in the new forum. The provision did not indicate that the transferred proceedings were to be treated as newly commenced actions. Rather, the latter part of the section described a notional commencement, meaning that the cases would be deemed to have begun and continued as if they had originally been filed in the Union courts. Consequently, the Court held that the provision preserved all rights that had already arisen or were likely to arise in the future, despite the change in the judicial structure, and that the Union courts were to handle those rights in place of the Covenanting State courts. The Court found no language in the section supporting a retrospective removal of any vested right of appeal.

The Court then applied the principle set out in Colonial Sugar Refining Co. v. Irving(1) (1) [1905] A.C. 369, concluding that the High Court’s order declaring the appeals incompetent was erroneous. Accordingly, the Court dismissed Appeal No. 152 of 1951 with costs awarded throughout, while allowing Appeals Nos. 167 and 167A of 1951 with costs awarded throughout. In addition, Appeal No. 125 was dismissed. The Court further recorded the agents representing the parties: for the appellants in Appeals Nos. 167 and 167A, the agent was Mohan Behari Lal; for the appellant in Appeal No. 152, the agent was Kundan Lal Mehta; for the respondents in Appeals Nos. 167 and 167A, the agent was Naunit Lal; and for the respondent in Appeal No. 152, the agent was Mohan Behari Lal.