# GOVERNMENT OF ORISSA ~ v. MIS. ASHOK TRANSPORT AGENCY AND ORS

- **Citation:** [2002] 3 S.C.R. 632
- **Court:** Supreme Court of India
- **Decided:** 2002-04-30
- **Bench:** M.B. Shah, B.N. Agrawal
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/government-of-orissa-v-mis-ashok-transport-agency-and-ors-18532
- **Pages:** 36

## Headnote

Code of Civil Procedure, 1908/0rissa Mining Corporation (Acquisition
~ L
and Transfer of Charge Chrome Division) Ordinance, 1991--0rder XXll Rule
c 1 O/Clause 1 (5)-Continuation of suit on devolution of interest during pendency
of suit-Whether an ex-parte decree against a company taken over by State
Government can be executed against the government even though the same
was not brought on record before passing of the decree-Difference of opinion
among the Judges on the question-Hence, case referred to larger Bench.
A
D
The question for consideration in the present appeal was whether an
"-
ex-parte decree against a company taken over by State Government can
be executed against the Government even though the same was not brought
>
on record before passing of the decree.
~
E
Appellant-State contended that the decree passed against the
defendant-company a division of Orissa Mining Corporation was not
binding on the State, as it was not brought on record as party-defendant;
it was duty of the plaintiff-respondent to bring the appellant-State on record
in view of its taking over the company and on failure to do so, the decree
against the original defendant would not be binding and cannot be executed
F
against a person in whom the interest has devolved.
·~
Respondent contended that decree was binding on the State a·s it is a
successor-in-interest of the original defendant as the State had not moved
'>
any application to set aside the ex-parte decree or filed appeal against the
G same or applied for declaration that the decree was binding.on it; and that
successor.s are bound by the result of the litigation even if such successors
are not brought 00 record.
Referring the matter to the larger Bench, the Court
~iH
632
•
-
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-'
•
GOVERNMENT OF ORI SSA v. ASHOK TRANSPORT AGENCY
633
HELD : (Per Shah, J.)
I.I. Though it is true that whatever steps have already taken place
in pending suit will continue to operate against and be binding on the
transferee and in the present case on the State of Orissa. But as ex-parte
decree was not passed prior to taking over by the State Government,
therefore, such decree would not be binding on the State Government as
it was not impleaded in the suit and the plaintiff has not taken steps for
continuing the suit against it. (643-D-El
1.2. For continuance of the suit, the person who is affected has to file
A
B
an application and normally such application is to be filed by the plaintiff. C
In the present case, plaintiff has not discharged such duty to apply for leave
for bringing the State of Orissa on record as party defendant.
(643-H; 644-A; 644-B(
1.3. The party who wants to continue the suit or other proceeding
has to apply to the Court to grant leave to continue suit or proceedings in D
such cases. To expect the party in whose favour an assignment, creation
or devolution of interest has taken place during the pendency of the suit,
to file application for continuing the suit against him, would be totally
unreasonable. Such party may not be knowing about such proceedings. May
E
be that, in cases where principle of /is pendente is applicable, such party
may apply to the court for grant of leave to continue the proceeding.
Similarly, if the decree is passed against the defendant, before assignment,
creation or devolution of interest, such party with the leave of court can
continue the appeal or file such appeal .. ·Iris also true that Rule to of Order
XXll CPC nowhere provides that.suit would abate in cases of assignment,
creation or devolution of any interest. The apparent reason may be that F
fsuit would not abate against the original defendant and Court may pass a
decree against such defendant. (639-D-F(
1.4. Clause 1(5) of Orissa Mining Corporation (Acquisition and
. Transfer of Charge Chrome Division) Ordinance, 1991 is in consonance G
with the provisions of Order XXll Rule to and other provisions of the CPC.
For continuing the suit against the State Government the State Government
is ;-equired to be bro

## Text

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)-
\
A
GOVERNMENT OF ORISSA
~
v.
MIS. ASHOK TRANSPORT AGENCY AND ORS.
,....
•
APRIL 30, 2002
~
B
[M.B. SHAH AND B.N. AGRAWAL, JJ.]
Code of Civil Procedure, 1908/0rissa Mining Corporation (Acquisition
~ L
and Transfer of Charge Chrome Division) Ordinance, 1991--0rder XXll Rule
c 1 O/Clause 1 (5)-Continuation of suit on devolution of interest during pendency
of suit-Whether an ex-parte decree against a company taken over by State
Government can be executed against the government even though the same
was not brought on record before passing of the decree-Difference of opinion
among the Judges on the question-Hence, case referred to larger Bench.
A
D
The question for consideration in the present appeal was whether an
"-
ex-parte decree against a company taken over by State Government can
be executed against the Government even though the same was not brought
>
on record before passing of the decree.
~
E
Appellant-State contended that the decree passed against the
defendant-company a division of Orissa Mining Corporation was not
binding on the State, as it was not brought on record as party-defendant;
it was duty of the plaintiff-respondent to bring the appellant-State on record
in view of its taking over the company and on failure to do so, the decree
against the original defendant would not be binding and cannot be executed
F
against a person in whom the interest has devolved.
·~
Respondent contended that decree was binding on the State a·s it is a
successor-in-interest of the original defendant as the State had not moved
'>
any application to set aside the ex-parte decree or filed appeal against the
G same or applied for declaration that the decree was binding.on it; and that
successor.s are bound by the result of the litigation even if such successors
are not brought 00 record.
Referring the matter to the larger Bench, the Court
~iH
632
•
-
-
-'
•
GOVERNMENT OF ORI SSA v. ASHOK TRANSPORT AGENCY
633
HELD : (Per Shah, J.)
I.I. Though it is true that whatever steps have already taken place
in pending suit will continue to operate against and be binding on the
transferee and in the present case on the State of Orissa. But as ex-parte
decree was not passed prior to taking over by the State Government,
therefore, such decree would not be binding on the State Government as
it was not impleaded in the suit and the plaintiff has not taken steps for
continuing the suit against it. (643-D-El
1.2. For continuance of the suit, the person who is affected has to file
A
B
an application and normally such application is to be filed by the plaintiff. C
In the present case, plaintiff has not discharged such duty to apply for leave
for bringing the State of Orissa on record as party defendant.
(643-H; 644-A; 644-B(
1.3. The party who wants to continue the suit or other proceeding
has to apply to the Court to grant leave to continue suit or proceedings in D
such cases. To expect the party in whose favour an assignment, creation
or devolution of interest has taken place during the pendency of the suit,
to file application for continuing the suit against him, would be totally
unreasonable. Such party may not be knowing about such proceedings. May
E
be that, in cases where principle of /is pendente is applicable, such party
may apply to the court for grant of leave to continue the proceeding.
Similarly, if the decree is passed against the defendant, before assignment,
creation or devolution of interest, such party with the leave of court can
continue the appeal or file such appeal .. ·Iris also true that Rule to of Order
XXll CPC nowhere provides that.suit would abate in cases of assignment,
creation or devolution of any interest. The apparent reason may be that F
fsuit would not abate against the original defendant and Court may pass a
decree against such defendant. (639-D-F(
1.4. Clause 1(5) of Orissa Mining Corporation (Acquisition and
. Transfer of Charge Chrome Division) Ordinance, 1991 is in consonance G
with the provisions of Order XXll Rule to and other provisions of the CPC.
For continuing the suit against the State Government the State Government
is ;-equired to be brought on record. Not that, automatically the State
Government is deemed to be party to the suit or proceedings. For
continuing the suit the plaintiff has to file application as contemplated under
Order XXll Rule 10 for bringing the State Government on record as a H
634
SUPREME COURT REPORTS
[2002] 3 S.C.R
A successor-in-interest. 1642-C-EI
Bhagwan Dass Chopra v. United Bank of India and Ors., (1987] Supp.
536 and St ·te of Orissa v. Klockner and Company and Ors., (1996] 8 SCC,
distinguished.
B
L It cannot be said that the decree passed against the original
defendant is binding on the State, as it is a successor-in-interest of the
original defendant since the State Government has not taken steps, such
as (a) moved an application under Order IX Rule 13 CPC for setting aside
the ex-parte decree, (b) preferred an appeal with the leave of the Court
against the original judgment and decree and (c) filed an independent suit
C for declaration that the ex-parte judgment and decree was not binding on
the State Government. Even if it was open to the appellant to file application
for setting aside the ex-parte decree or to prefer an appeal, that would not
mean that the ex-parte decree which is passed against the original defendant
is binding on it as the decree was passed after devolution of interest and
D not prior to it. 1644-B-DI
3. It cannot be said that successors are bound by the result of the
litigation even if such successors are not brought on record. 1644-EI
--.._
Manda/ v. Biswanath Manda/, AIR (1915) Calcutta 103 and Mahanth
E Harihar Gir v. Karu Lal and Ors., AIR (1935) Patna 488, referred to.
Per B.N. Agrawal, J.
1. Under Rule 10, Order 22 CPC, when there has been a devolution
of interest during the pendency of a suit, the suit may, by leave of the Court,
F
be continued by or against persons upon whom such interest has devolved
and this entitles the person, who has acquired an interest in the subject
matter of the litigation by an assignment or creation or devolution of
interest pendente lite or suitor or any other person interested, to apply to
the Court for leave to continue the suit. But it does not follow that it is
obligatory upon them to do so. If a party does not ask for leave, he takes
G the obvious risk that the suit may not be properly conducted by the plaintiff
on record. 1649-G, HI
Sm/. Saila Bala Dassi v. Smt. Nirma/a Sundari Dasi and Anr., AIR (1958)
Supreme Court 2159, followed.
H
Rikhu Dev v. Che/a Bawa Hariug Das v. Som Dass (deceased) through
.t
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GOVERNMENT OF ORISSA v. ASHOK TRANSPORT AGENCY
635
his Che/a Shiama Das, AIR (1975) Supreme Court 2159, relied on,
A
State of Orissa v. K/ockner and Company and Ors., (1996) 8 SCC 377,
distinguished.
Moti Lal v. Karab-ud-Din, (1898) 25 Cal. 179; Prannath v. Rookea
Begum, (1851-59) 7 M.l.A. 323; Rai Charan Manda/ and Anr., v. Biswanath B
Manda/ and Ors., AIR (1915) Calcutta 103 and Mahanth Harihar Gir v. Karu
Lal and Ors., AIR (1995) Patna 488, referred to.
2.1. Executing Court can allow objection under Section 47 CPC to
the executability of the decree if ii is found that the same is void ab initio
and nullity, apart from the ground that decree is not capable of execution C
under law either because the same was passed in ignorance of such a
provision of law or the law was promulgated making a decree inexecutable
after its passing'. (662-E-G)
2.2. In the case on hand, the decree was passed against the defendant D
without seeking leave of the Court to continue the suit against the
Government of Orissa upon whom interest of the defendant devolved and
impleading it. Such an omission would not make the decree void ab initio
so as to invoke Section 47 CPC and entail dismissal of execution. The
validity or otherwise of a decree may be challenged by filing a properly
constituted suit or taking any other remedy available under law on the E
ground that original defendant absented himself from the proceeding of
the suit after appearance as it had no longer any interest in the subject of
dispute or did not purposely take interest in the proceeding or colluded
with the adversary or any other ground permissible under law. (662-E-GJ
Dhurandhar Prasad Singh v. Jai Prakash University and Ors., (2001 J 6 F
sec 534, relied on.
Kiran Singh and Ors. v. Chaman Paswan and Ors., AIR (1954) S.C.
340; lttyavira Mathai v. Varkey Varkey and Anr., AIR (1964) SC 907; Vasudev
Dhanjibhai Modi v. Rajabhai Abdul Rehman and Ors., AIR (1970) SC 1475;
Everest Coal Company (P) Ltd. v. State of Bihar and Ors., ) 1978) 1 SCC 12; G
Haji S.K. Subhan v. Madho Rao, AIR (1962) SC 1230 and Vidya Sagar v.
Smt. Sudesh Kumari and Ors., AIR (1975) SC 2295, referred to.
~
Durayappah v. Fernando and Ors., (1967) 2 All England Law Reports
152; In re McC. (A minor) (1985) 1 Appeal Cases 528: Director of Public H
636
SUPREME COURT REPORTS
(2002) 3 S.C.R.
A Prosecution v. Head, (1959) Appeal Cases 83 and Paddington Valuation
Officer and Anr. v. Exparte Peachey Property Corporation Ltd., (1965) 2 All
England Law Reports 836, referred to.
B
Judicial Review of Administrative Action, Fifth Edition by De Smith, Woolf
and Jowell; Judicial Remedies in Public Law by Clive Lewis, referred to.
2.3. The question whether a decree can.be executed against successorin-interest of the defendant upon whom interest has devolved during the
pendency of the suit without bringing him on record and seeking leave to
continue the suit against him, cannot be decided under Section 47 CPC by
C Executing Court, such a decree being not a nullity, and only voidable which
can be avoided by challenging the same effectively in a properly constituted
suit in a court of competent jurisdiction on the ground permitted by law
and in such a case the bar created by Section 47(1) CPC to the institution
of separate suit shall not operate. The provisions of Section 50 and Section
52 CPC can be of no avail for deciding the point in issue as the same can
D apply in cases of death of a person covered by Order 22 Rules 3 and 4
CPC, as the case may be, and not in cases of assignment, creation or
devolution of interest which is governed exclusively by Rule 10 of Order
22. (644-F-H; 665-A]
E
3.1. From a bare perusal of Sections 2(c)(3), 4(5) and 5 of the
Ordinance, it would be plain that liability of the Charge Chrome Division
in the suit upon its being taken over became liability of the Government
of Orissa and is enforceable against it. Such a provisions that the suit shall
not abate, be discontinued or in any manner prejudically affected by reason
of devolution of interest during its pendency has not been explicitly made
F in Order 22 rule 10 CPC like Section 4(5) of the Ordinance but the same
is implicit therein. Both the provisions lay down that in case there is
devolution in interest during the pendency of a suit under Order 22 Rule
10 CPC as well as Section 4(5) of the Ordinance, the suit may be continued
by or against the person upon whom the interest has devolved. A successorG in-interest may challenge validity or otherwise of a decree passed against
the predecessor-in-interest without impleading the successor-in-interest
upon whom the interest has devolved during the pendency of the suit, by
filing a properly constituted suit or taking any other remedy available
under law on the ground that the original defendant absented himself from
the proceeding of the suit after.appearance and filing written statement as
H he had no longer any interest in the subject of dispute or did not purposely
.)r.,..-
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_..,.
GOVERNMENT OF ORISSA v. ASHOK TRANSPORT AGENCY [SHAH, J.]
637
take interest in the proceeding or colluded with the adversary or any other A
ground permissible under law as such a challenge would make the decree
voidable and not void much less ab initio so as to make it nullity.
(665-H; 666-A-DI
3.2. In the present case, it cannot be said that the decree is even
voidable much less void or void ab initio. Therefore , the Government of B
Orissa is precluded from challenging its validity or otherwise even by filing
a separate suit much less taking objection under Section 47 CPC.
(666-G-H(
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3209 of C
2002.
From the Judgment and Order dated 19.7.2000 of the Orissa High
Court in C.R. No. I l 7 of 1998.
Altaf Ahmed, Additional Solicitor General and Kirti Renu Mishra for D
the Appellant.
B.A. Mohanty, Ashok Mathur, Ms. Mamta Tripathi, Harshvardhan Jha,
Anukul Chandra Pradhan and Shiv Sagar Tiwari for the Respondents.
The Judgments of the Court were delivered by
SHAH, J. Heard the learned counsel for the parties.
Leave granted.
E
Short question involved in this matter is-whether an ex parte decree F
passed against a Company which was taken over by the Orissa Ordinance
No.8 of 199 l by the State Government can be executed against the State
Government even though the Government of Orissa was not brought on
record before passing of the decree? Admittedly, the Ordinance taking over
the assets of the Charge Chrome Division of the Orissa Mining Corporation
Ltd. was promulgated on 24th September, 1991 and the suit filed by the G
respondents was decreed against the Charge Chrome Division on 12th
November l99l without bringing the State Government on record as party
defendant.
Thereafter, the judgment creditor filed an Execution Application on
24th October, 1994 for recovering the amount decreed from the Government H
638
SUPREME COURT REPORTS
[2002] 3 S.C.R.
A of Orissa as well as other respondents. The State Government contended that
the decree is not executable against it as it was not brought on record and
there is no decree against it. The trial court rejected the objection raised by
the appellant on the basis of decision rendered by this Court in State of
Orissa v. Klockner and Company and Ors., [1996] 8 SCC 377. Against that
judgment and order, the appellant preferred C.R. No. 117 of 1998 before the
B High Court of Orissa, Cuttack. The Orissa Mining Corporation Limited also
filed C.R. No. 64 of 1998 against the said order by contending that decree
against it is not executable. The High Court allowed the revision filed by the
Orissa Mining Corporation on the ground that Execution Application against
it would not survive as no liability accrued against it. However the revision
C filed by the State Government was dismissed. Hence this appeal.
Mr. Altaf Ahmad, Additional Solicitor General appearing for the
appellant submitted that the judgment and decree passed against the
defendant-Charge Chrome Division of the Orissa Mining Corporation is not
binding on the appellant as the appellant was not brought on record as party
D defendant. After the Ordinance which was promulgated on 24th September,
1991, it was the duty of the plaintiff respondent to bring the appellant on
record as party defendant in view of its taking over the company, if at all
plaintiff wanted a decree executable against it. He submitted that in such
cases, procedure prescribed under Order XXII Rule l 0 of the CPC which
E enables the plaintiff to continue the suit is required to be followed. It is his
contention that it is the choice of the plaintiff to bring the person on record
in whose favour an assignment, creation or devolution of any interest during
the pendency of the suit has taken place for continuing the suit and ifhe does
not bring them as party defendants, then the decree passed against the original
defendant would not "be binding and cannot be executed against the person
F in whom the interest has devolved.
As against this, learned counsel for the respondent submitted that the
judgment and order passed by the High Court is in accordance with law and
does not call for any interference.
G
For appreciating the contentions raised by the learned counsel for the
H
parties, we would only refer to relevant part of Rule l 0 of Order XXII of the
CPC which reads as under:-
"10( 1) In other cases of an assignment, creation or devolution of any
interest during the pendency of a suit, the suit may, by leave of the
Court, be continued by or against the person to or upon whom such
-
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GOVERNMENT OF ORISSA '· ASHOK TRANSPORT AGENCY [SHAH, J.]
639
interest has come or devolved."
Order XXII provides the procedure for bringing the legal representatives
of parties on record in case of death, marriage or insolvency of parties. It also
provides in which cases the proceeding would abate where legal representatives
are not brought on record.
A
B
As against that, Rule 10 only provides for continuing the suit where
there is an assignment, creation or devolution of any interest during the
pendency of the suit. It is an enabling provision to the affected party to
continue the suit by or against the person to or upon whom such interest has
come or devolved. Normally, ifthe plaintiffs interest has come to or devolved,
say in Y, then Y has to approach the Court for enabling him to continue the C
suit with the leave of the court. This provision also applies at the appellate
stage. Further, defendant would not approach the Court by filing an application
that leave may be granted to continue the suit against him. It is for the
plaintiff to approach the Court when there is assignment, creation or devolution
of interest during the pendency of the suit and Court may permit to continue D
the said suit against the person upon whom such interest has come or devolved.
That means, the party who wants to continue the suit or other proceeding has
to apply to the Court to grant leave to continue suit or proceedings in such
cases. To expect the party in whose favour an assignment, creation or
devolution of interest has taken place during the pendency of the suit, to file
application for continuing the suit against him, would be totally unreasonable. .E
Such party may not be knowing about such proceedings. May be that, in
cases where principle of /is pendente is applicable, such party may apply to
the court for grant of leave to continue the proceeding. Similarly, if the
decree is passed against the defendant before assignment, creation or
devolution of interest, such party with the leave of court can continue the F
appeal or file such appeal. It is also true that Rule IO nowhere provides that
suit would abate in cases of assignment, creation or devolution of any interest.
The apparent reason may be that suit would not abate against the original
defendant and Court may pass a decree against such defendant.
The next question would be-whether a decree can be executed against G .
a person in whom interest has devolved pending suit, if such person is not
brought on record.
-'\
Section 47 inter alia provides that all questions arising between parties
to the suit in which decree was passed or their representatives and relating
to the execution are required to be determined by the Court executing the H
640
SUPREME COURT REPORTS
[2002] 3 S.C.R.
A decree and not by a separate suit. Explanation I provides that who are
considered to be parties to the suit. Therefore, whether decree is executable
against the appellant is required to be decided in the execution application
and not by the separate suit. Sections 50 and 52 deal with cases when the
decree could be executed against legal representatives. The said sections read
B thus:
c
D
E
F
"50. legal Representative. (/) Where a judgment-debtor dies before
the decree has been fully satisfied, the holder of the decree may apply
to the Court which passed it to execute the same against the legal
representative of the deceased.
(2) Where the decree is executed against such legal representative, he
shall be liable only to the extent of the property of the deceased
which has come to his hands and has not been duly disposed of; and,
for the purpose of ascertaining such liability, the Court executing the
decree may, of its own motion or on the application of the decreeholder, compel such legal representative to produce such accounts as
it thinks fit.
52. Enforcement of decree against legal representative. (1) Where
a decree is passed against a party as the legal representative of a
deceased person, and the decree is for the payment of money out of
the property of the deceased, it. may be executed by the attachment
and sale of any such property.
(2) Where no such property remains in the possession of the judgmentdebtor and he fails to satisfy the Court that he has duly applied such
property of the deceased as is proved to have come into his possession,
the decree may be executed against the judgment-debtor to the extent
of the property in respect of which h.e .has failed so to satisfy the
Court in the same manner as if the decree had been against him
personally."
Section 50 therefore only provides that in case where judgment debtor
G dies before decree has been fully satisfied, the said decree can be executed
against the legal representatives of the deceased only to the extent of the
property of the deceased which has come to his hands and has not been duly
disposed of. This Section contemplates a situation where decree has been
passed and thereafter judgment-debtor dies before the decree has been fully
satisfied. But it does not provide that a decree passed against a person who
H is not brought on record in a pending suit can be .executed against him. No
\
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GOVERNMENT OF ORISSA v. ASHOK TRANSPORT AGENCY [SHAH, J.]
64 J
provision is made that in case of assignment, creation or devolution of interest A
in a pending suit, decree can be executed against the legal representatives
without bringing them on retord as party defendants. As against this, Section
52 provides for a situation where a decree is passed against the legal
representative of a deceased person. In such cases, the legal representative is
a judgment debtor. If the decree is for pay111ent of money out of the property
of the deceased, the section permits the decree to be executed against the B
property of the deceased in the hands of the legal representatives and the
legal representatives are liable to satisfy the decree only out of the assets of
the deceased in their hands. However, there is no provision which contemplates
a situation where a decree can be executed against the legal representative
who is not brought on record in case of death of the original defendant or in C
case where there is assignment, creation or devolution of an interest during
the pendency of the suit by the defendant.
The High Court relied upon the decision of this Court in Klockner &
Co. 's case (supra), wherein this Court considered the take-over ·Ordinance,.
namely, Ordinance No.8 of 1991. In that case, after the merger of Chrome D
Division with the State Government, the dispute arose on the basis of previous
contract between the Charge Chrome Division and the respondent~Klockner
and Co. When the State ofOrissa received notice of the arbitration proceedings,
it filed suit for a declaration that it was not the successor-in-interest. It also
prayed for permanent injunction against the Company from prosecuting the E
arbitration proceedings. In that context, the Court considered clauses 4, 5, 6,
7 and 9 of the takeover Ordinance. After considering the aforesaid clauses,
the Court held that the State ofOrissa is a successor-in-interest of the Charge
Chrome Division of Orissa Mining Corporation and, therefore, the contention
of the State that it has nothing to do with the contract entered into between
Klockner and Co. and OMC in respect of which the former has initiated F
arbitration proceedings invoking Section 3 of the Foreign Awards Act was
not acceptable. This decision nowhere deals with the contention which is
raised in these proceedings. The Court held that proceedings on the basis of
the contract executed by the transferee company could be implemented in
view of various clauses of take over Ordinance. There is no dispute in the G
present proceedings that State Government is successor-in-interest of Charge
Chrome Division.
For our purpose, relevant clause 1(5) of the Orissa Mining Corporation
(Acquisition and Transfer of Charge Chrome Division) Ordinance, 1991 is as
under: -
H
642
A
B
SUPREME COURT REPORTS
[2002) 3 S.C.R.
"1(5) If, on the appointed day, any suit, appeal or other proceeding
of whatever nature in relation to any property; which has vested in
the State Government under Section 3 or instituted or preferred by or
against the Charge Chrome Division is pending, the same shall not
abate,. be discontinued or be, in any way prejudicially affected by
reason of the vesting and transfer of the Charge Chrome Division of
the Company but the suit, appeal or other proceeding may be continued
or enforced by or against the State Government or, where the Charge
Chro~e Division of the Company is vested under Section 6 in any
other company, by or against the other company."
C
The aforesaid Sub-clause (5) is in consonance with the provisions of
Order XXII Rule 10 and other provisions of the CPC. It inter alia provides
that if on the appointed day, any suit in relation to any property which is
vested in the State Government under section 3 is pending, the same shall not
abate or be discontinued or be in any way prejudicially affected by reason of
the vesting and transfer of the Charge Chrome Division of the Company but
D the suit may be continued against the State Government. This would impliedly
·mean that for continuing the suit against the State Government, the State
Government is required to be brought on record. Not that, automatically the
.,,..
State Government is deemed to be party to the suit or proceedings. For
~·
continuing the suit, the plaintiff has to file application as contemplated under
E Order XXII Rule 10 for bringing the State Government on record as a
successor-in-interest.
The High Court has also relied upon the decision of this Court in
Bhagwan Dass Chopra v. United Bank of India and Ors., [1987] Supp SCC
536] for holding that the appellant would become a judgment debtor and the
F
decree passed against the Chrome Division would be binding on the appellant
and the decree could be executed against it. In that case, the Court was
dealing with the Industrial Disputes Act, 194 7 and held that there is no
express provision corresponding to Order XXII Rule I 0 of CPC under the
Industrial Disputes Act. However, it was necessary to evolve a reasonable
G procedure to deal with cases where a devolution of interest takes place during
the pendency of a proceeding arising under the Industrial Disputes Act. In
that context, the Court held as under: -
"It follows that subject to such terms it becomes liable to be
impleaded or becomes entitled to be impleaded in the place of or in
H
addition to the transferor company or corporation in any action, suit
GOVERNMENT OF ORISSA "· ASHOK TRANSPORT AGENCY [SHAH, J.]
643
or proceeding filed against the transferor company or corporation by A
a third party or filed by the transferor company or corporation against
a third party and that whatever steps have already taken place in
those proceedings will continue to operate against and be binding on
the transferee company or corporation in the same way in which they
operate against a person on whom any interest has devolved in any B
of the ways mentioned in Rule I 0 of Order 22 of the Code of Civil
Procedure, 1908 subject of course to any terms in the contract of
transfer or merger, scheme of amalgamation or other relevant legal
provisions governing the transaction under which the transferee
company or corporation has become the successor-in-interest of the
transferor company or corporation."
C
The aforesaid observations would mean that in such cases it was open
to the respondent (plaintiff in the original suit) to implead State Government
as party defendant as successor-in-interest, but if there is failure to do so on
the part of the plaintiff, it would not mean that the decree against the original
defendant whose interest has already devolved in the State Government would D
be binding to it. It is true that whatever steps have already taken place in
--<:
pending suit will continue to operate against and be binding on the transferee
•
and in the present case on the State of Orissa. But as stated above, ex parte
decree was not passed prior to taking over by the State Government, therefore,
such decree would not be binding on the State Government as it was not E
impleaded in the suit and the plaintiff has not taken steps for continuing the
suit against it.
This Court in Dhurandhar Prasad Singh v. Jai Prakash University and
Ors., [2001] 6 SCC 534 while dealing with the provisions of Rule 10 of
Order XXII inter a/ia observed as under (page 549 para 26): -
p
"It simply says that the suit may be continued by the person upon
whom such an interest has devolved and this applies in a case where
the interest of the plaintiff has devolved. Likewise, in a case where
interest of the defendant has devolved, the suit may be continued
against such a person upon whom interest has devolved, but in e\ther G
eventuality, for continuance of the suit against the persons upon whom
the interest has devolved during the pendency of the suit, leave of the
court has to be obtained."
This would clearly mean that for continuance of the suit, the person
who is affected has to file an application and normally such application is to H
644
SUPREME COURT REPORTS
[2002) 3 S.C.R.
A be filed by the plaintiff. The Court has further observed as under: -
"As a rule of prudence, initial duty lies upon the plaintiff to apply
for leave in case the factum of devolution was within his knowledge
or with due diligence could have been known by him."
B
In the present case, plaintiff has not discharged such duty to apply for
leave for bringing the State of Orissa on record as party defendant. Learned
counsel for the respondent, however, submitted that as the State Government
has not taken steps, such as, (a) moved an application under Order IX Rule
13 CPC for setting aside the ex parte decree, (b) preferred an appeal with the
leave of the Court against the origin~) judgment and decree and ( c) filed an
C independent suit for declaration that the ex parte judgment and decree was
not binding on the State Government, the decree passed against the original
defendant is binding on it as it is a successor-in-interest of the original
defendant. In our view, the aforesaid submission cannot be accepted. Even if
it was open to the appellant to file application for setting aside the ex parte
D decree or to prefer a11 appeal, that would not mean that the ex parte decree
which is passed against the original defendant is binding on it as.the decree
was passed after devolution of interest and not prior to it.
Learned counsel for the respondents contended that successors are bound
by the result of the litigation even if such successors are not brought on
E record and in support of his contention he relied upon the decision rendered
by the High Court of Calcutta in Rai Charan Manda/ v. Biswanath Manda/,
AIR (1915) Calcutta 103. In our view, this submission is totally misconceived.
In the said case, the Court dealt with a situation where interest of the plaintiff
devolved on the successors and the successors did not file any application for
leave to continue the suit. The Court held that the plaintiff is entitled to
F continue the suit and his successors will be bound by the result of the litigation.
This would not mean that if plaintiff fails to bring the successors of defendant
on record, the decree would be binding to the successors.
The aforesaid decision was followed by Patna High Court in Mahanth
G Harihar Gir v. Karu Lal and Ors., AIR (1935) Patna 488. In that case, after
passing of the preliminary decree in the mortgage suit against the defendantmortgagee and before the final decree, one of the mortgagee had relinquished
his right of mahanthship in favour of a third party, appellants of that case,
without informing the Court or the decree holder, and the Court held that in
such cases Order XXll Rule I 0 CPC would be applicable and it was for the
H defendant or the assignee to file an application for bringing him on record.
-
GOVERNMENT OF ORISSA v. ASHOK TRANSPORT AGENCY [B.N. AGRAWAL, J.] 645
It is true that after passing of the decree, it was for the .defendant or the A
assignee to take appropriate steps for setting aside the decree but that would
not mean that prior to the decree assignee or the person on whom the property
has devolved has to apply,
In view of the aforesaid discussion, the impugned order passed by the
High Court in CR No. 117 of 1998 confirming the order passed by the trial B
court in Execution Case No. 50 of 1994 rejecting the objection application
filed by the appellant, is set aside. It is held that the decree passed against the
original defendant Charge Chrome Division is not binding to the appellant
and, therefore, it is inexecutable against the appellant.
The appeal is allowed accordingly with no order as to costs.
B.N. AGRA WAL, J. I have perused the lucid judgment prepared by
my learned Brother Shah, J., for whom I have all due regard, but in spite of
best efforts, I am not about to persuade myself to agree with him. In order
c
to appreciate the controversy, it would be necessary to enumerate the facts D
hereunder in somewhat more detail.
Mis Ashok Transport Agency-respondent No. l (hereinafter referred to
as the plaintiff') instituted a suit bearing Money Suit No. 491of1986 against
Mis. Orissa Mining Corporation (Alloys) Ltd. respondent No. 2 (hereinafter
referred to as 'the defendant' for realisation of a sum of Rs. 3,90,210 with E
interest thereon. In the said suit, on 14th October, 1987, written statement
was filed on behalf of the defendant contesting claim of the plaintiff. During
pendency of the suit. Government of India in the Ministry of Law & Justice
by its order dated 30th August, 1991 permitted merger of the defendant with
F
the Orissa Mining Corporation Ltd., (hereinafter referred to as 'the
Corporation') of which it was subsidiary and after merger the same became
Charge Chrome Division of the Corporation. Thereupon, Government of Orissa
promulgated Orissa Mining Corporation (Acquisition and Transfer of Charge
Chrome Division) Ordinance, 1991 notified in the Orissa Gazette on 24th
September, 1991 (hereinafter referred to as 'the Ordinance') by which Charge
Chrome Division of the Corporation and right, title and interest of the
Corporation in relation to the Charge Chrome Division stood transferred and G
vested in the Government of Orissa w.e.f. the date of Ordinance. According
to the Ordinance, every liability of the Charge Chrome Division would be
liability of the Government of Orissa in which its property had vested and
shall be enforceable against it. In the said suit, no steps were taken to continue
the suit against the Government of Orissa either by the plaintiff or the defendant H
646
SUPREME COURT REPORTS
[2002) 3 S.C.R.
A or the Corporation inasmuch as the Government of Orissa upon whom the
interest devolved did not apply to the trial court for being impleaded as party
defendant. That apart, the defendant though filed written statement but as it
did not take any further step, the suit was set ex parte on 31st October, 1991
in which ex parte evidence was recorded and the matter was posted for
judgment on 12th November, 1991 on which date, the unit was decreed ex
B parte and the defendant was directed to pay Rs. 3,90,210 to the plaintiff
together with interest thereon. Thereafter, as the decretal amount was not
paid by the defendant, the plaintiff sent a notice on 4th January, 1992 calling
upon it to pay the same whereupon the plaintiff, for the first time, having
learnt that the defendant which was subsidiary of the Corporation merged
C into it by virtue of aforesaid order passed by the Central Government on 30
August, 1991, from which date, the same became a Charge-chrome Division
of the Corporation and 24th September, 1991, the right, title and interest of
the Corporation in relation to its Charge-chrome Division stood transferred
to and vested in the Government of Orissa, sent a registered notice on 8
D
April, 1993 to the Secretary, Department of Steel and Mines, Government of
Orissa, demanding payment of the aforesaid decretal dues inasmuch as another
notice was sent to the Corporation and its Chairman-cum-Managing Director
to the same effect. As the decretal dues were not paid, the same necessitated
filing of execution case by the plaintiff-decree-holder on 24 October, 1994
which was registered as Execution Case No. 50 of 1994 impleading therein
E apart from the .defendant who was the judgment-debtor, the Corporation with
which the defendant company merged as its Charge Chrome Division and
Government of Orissa in whom the right, title and interest of the said Division
stood transferred and vested seeking execution of the decree against all the
three.
F
In the said execution case, the Corporation filed objection under Section
47 of the Code of Civil Procedure (hereinafter referred to as 'the Code')
objecting to execution of the decree against it on grounds, inter alia, that
assets and liabilities of said Division of the Corporation having been taken
over by the Government of Orissa by virtue of the aforesaid Ordinance, the
decree could not be executed against the Corporation more so when it was
G not impleaded as a party to the suit. The Government of Orissa filed separate
objection under Section 47 of the Code objecting to the executability of the
decree against it on grounds, inter alia, that it was. not a party to the suit, it
was not having any record of the aforesaid money suit and no intimation was
given by the plaintiff to Secretary, Government of Orissa in the Department
H of Steel and Mines, about the claim of the plaintiff as such the decree passed
_.
'
GOVERNMENT OF ORISSA ''· ASHOK TRANSPORT AGENCY [B.N. AGRAWAL, J.) 647
against the defendant after the promulgation of the Ordinance without seeking A
leave to continue the suit against the Government of Orissa being nullity
cannot be enforced against it. The executing court after taking into
consideration all the pros and cons of the matter rejected both the objections
aforesaid whereupon two revisions were filed before the High Court ofOrissa,
one by the Government of Orissa and another the Corporation out of which B
revision filed by the Corporation was allowed and objection filed by it sustained
whereas that by the Government of Orissa dismissed leading to filing of the
present appeal on Special Leave by it.
Shri Altaf Ahmed, leaned Additional Solicitor General appearing in
support of the appeal, submitted that although the defendant company had C
merged into the Corporation as its Charge Chrome Division which was taken
over by virtue of the Ordinance and its assets and liabilities stood transferred
and vested in the Government of Orissa, under Order 22 Rule I 0 of the Code
it was duty of the plaintiff who was prosecuting the suit to ensure by seeking
leave of the Court that effective relief be granted to it by bringing the
Government of Orissa on record which was a necessary party. It was further D
submitted that decree passed against the defendant, which had ceased to
exist, is akin to decree passed against a dead person without bringing his
legal representatives on the record, which being a nullity, cannot be enforced
against the Government ofOrissa. Shri B.A. Mohanty, learned senior counsel
appearing on behalf of respondent no.