# MjS. RAM CHAND AND so:-;s St:GAR MILLS PVT. LTD v. KANHAYA LAI. llHARGAVA & ORS . . \larch 10. 1966

- **Citation:** [1966] 3 S.C.R. 856
- **Court:** Supreme Court of India
- **Decided:** 1965-08-27
- **Bench:** K. SCBl!A RAO A!'D V. RA\tASWA
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/mjs-ram-chand-and-so-s-st-gar-mills-pvt-ltd-v-kanhaya-lai-llhargava-ors-larch-3773
- **Pages:** 7

## Headnote

Code of Civil Procedure (Act 5 of 1908), s. 151 and O.XXIX r. 3l)irector of Company summoned to answer material quertions--Company
when responsible for his non-appearance-Inherent powers of court to
prevent abuse of process of court-Scope of.
A
B
'!he first respondent filed a suit against the appellant company and
C
one R for recovery of a sum of money. The coun acting under OXXIX
r. 3 of the Code of Civil Procedure dirc-ctcd J one of the directors of
the company to appear before it and answer certain material questions in
relation to the suit and when he did not appear the appellant waa directed
to produce him, with the same result.
The Coun after gi•ing notice to
the appellant struck off ils defence in purported exercise of its inherent
powers under s. 151 of the Code. The High Court dismissed the appellant's re,ision petition whereupon it appealed to this coun by special
leave.
It was contended on behalf of the appellant that inherent power
could not be invoked in the circumstances of the case.
HELD :
( i) Whatever limitations are impooed by construction on tho
provi•ions of s. 151 of the Code. they do not
control
the
ullAloobte<l
power of the court conferred under s. 151 of the Code to make a suitable order to prevent the abuse of the process of the Court. (860)
Padam Sen v. Stare of VIiar Pradesh, [1961] I S.C.R. 884, MQJtOhltr
Lal Chopra v. Rai Bahadur Ron Raja Ser/a !lira/al, (1962) Supp. I S.C.R.
450 and Arjun Singh v. Moliindra Kumar, (1964) 5 S.C.R. 946, applied.
(ii) There is nothing in O.XXIX of the Code which expr..,.ly or by
neca<sary implication, precludes the exerci,., of the inherent power of tho
Coon under s. 151 of the Code. In a case of default made by a director
who failed to appear in conn when he was "° required under the afor"'3id
rule, tho conn can make a suitable con.sequential order under '·
151
of the Code as may be necessary for the ends of justice or lo prevent the
abu"" of the process of the Coon. [861 EJ
D
E
F
(iij) 'Any director' in O.XXIX r. 3 need not be the same director
who has signed and verified a pleading or on whom summons had been
served.
He can be any one of the directors who will be in a position to
G
answer malorial questions relating to the suit. (861 A-BJ
(iv) In the prc<cnt case the coon was justified in &triking off tho
defence of the appellant company.
Unless there was a finding of collusion between the appellant and the director in that the former prevented
the latter from appearing in court it was difficlt to make the company
constructively liable for the default of one of its directo"-
A director'a
act.s outside the scope of his powers could not bind the company and it
wa• nor possible to hold that the director in refus:ng to respond to the
notice given by the court was acting within the scope of the power9 conferred on him. [861H-862 DJ
11
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RAMCHAND MILLS v. K. L. BHARGAVA (Subba Rao, J.) 857
CIVIL APPELLATE JURISD!Cl!ON : Civil Appeal No. 166 of 1966.
Appeal by special leave from the order dated August 27, 1965
of the Punjab High Court (Circuit Bench) at Delhi in Civil Revision
No. 289-D of 1965.
S. N. And/ey, Rames/mar Nath, Mahinder Narain, for the appellants.
A. K. Sen. B. Sen, B. P.
.Maheshwari, P. D. B!wrgava and
M. S. Narasimhan, for the respondents .
The. Judgment of the Court was delivered by
Sobba Rao. J.-This appeal by special leave is directed against
the order of the Punjab High Court confirming that of the Subordinate Judge, Delhi, striking out the defence of the appellant under
s. 151 of the Code of civil Procedure, hereinafter called the Code.
Kanhaya Lal Bhargava, the 1st respondent,
filed a suit on
April 27, 1962, in the Court of the Subordinate Judge, First Class,
D
Delhi, against Messrs. Ram Chand & Sons Sugar Mills Private
Limited, the appellant, and one Ram Sarup for the recovery of a
sum of Rs. 45,112.94.
Pending the suit, on October 27, 1964, the
!st respondent filed an application in the said court

## Text

856
MjS. RAM CHAND AND so:-;s St:GAR MILLS PVT. LTD.
v.
KANHAYA LAI. llHARGAVA & ORS .
. \larch 10. 1966
[K. SCBl!A RAO A!'D V. RA\tASWA.,11, JJ.j
Code of Civil Procedure (Act 5 of 1908), s. 151 and O.XXIX r. 3l)irector of Company summoned to answer material quertions--Company
when responsible for his non-appearance-Inherent powers of court to
prevent abuse of process of court-Scope of.
A
B
'!he first respondent filed a suit against the appellant company and
C
one R for recovery of a sum of money. The coun acting under OXXIX
r. 3 of the Code of Civil Procedure dirc-ctcd J one of the directors of
the company to appear before it and answer certain material questions in
relation to the suit and when he did not appear the appellant waa directed
to produce him, with the same result.
The Coun after gi•ing notice to
the appellant struck off ils defence in purported exercise of its inherent
powers under s. 151 of the Code. The High Court dismissed the appellant's re,ision petition whereupon it appealed to this coun by special
leave.
It was contended on behalf of the appellant that inherent power
could not be invoked in the circumstances of the case.
HELD :
( i) Whatever limitations are impooed by construction on tho
provi•ions of s. 151 of the Code. they do not
control
the
ullAloobte<l
power of the court conferred under s. 151 of the Code to make a suitable order to prevent the abuse of the process of the Court. (860)
Padam Sen v. Stare of VIiar Pradesh, [1961] I S.C.R. 884, MQJtOhltr
Lal Chopra v. Rai Bahadur Ron Raja Ser/a !lira/al, (1962) Supp. I S.C.R.
450 and Arjun Singh v. Moliindra Kumar, (1964) 5 S.C.R. 946, applied.
(ii) There is nothing in O.XXIX of the Code which expr..,.ly or by
neca<sary implication, precludes the exerci,., of the inherent power of tho
Coon under s. 151 of the Code. In a case of default made by a director
who failed to appear in conn when he was "° required under the afor"'3id
rule, tho conn can make a suitable con.sequential order under '·
151
of the Code as may be necessary for the ends of justice or lo prevent the
abu"" of the process of the Coon. [861 EJ
D
E
F
(iij) 'Any director' in O.XXIX r. 3 need not be the same director
who has signed and verified a pleading or on whom summons had been
served.
He can be any one of the directors who will be in a position to
G
answer malorial questions relating to the suit. (861 A-BJ
(iv) In the prc<cnt case the coon was justified in &triking off tho
defence of the appellant company.
Unless there was a finding of collusion between the appellant and the director in that the former prevented
the latter from appearing in court it was difficlt to make the company
constructively liable for the default of one of its directo"-
A director'a
act.s outside the scope of his powers could not bind the company and it
wa• nor possible to hold that the director in refus:ng to respond to the
notice given by the court was acting within the scope of the power9 conferred on him. [861H-862 DJ
11
..
~
•
,,.,
\ J
•
•
-' ' .
\
iP'
•
•
. r
' t
A
B
c
RAMCHAND MILLS v. K. L. BHARGAVA (Subba Rao, J.) 857
CIVIL APPELLATE JURISD!Cl!ON : Civil Appeal No. 166 of 1966.
Appeal by special leave from the order dated August 27, 1965
of the Punjab High Court (Circuit Bench) at Delhi in Civil Revision
No. 289-D of 1965.
S. N. And/ey, Rames/mar Nath, Mahinder Narain, for the appellants.
A. K. Sen. B. Sen, B. P.
.Maheshwari, P. D. B!wrgava and
M. S. Narasimhan, for the respondents .
The. Judgment of the Court was delivered by
Sobba Rao. J.-This appeal by special leave is directed against
the order of the Punjab High Court confirming that of the Subordinate Judge, Delhi, striking out the defence of the appellant under
s. 151 of the Code of civil Procedure, hereinafter called the Code.
Kanhaya Lal Bhargava, the 1st respondent,
filed a suit on
April 27, 1962, in the Court of the Subordinate Judge, First Class,
D
Delhi, against Messrs. Ram Chand & Sons Sugar Mills Private
Limited, the appellant, and one Ram Sarup for the recovery of a
sum of Rs. 45,112.94.
Pending the suit, on October 27, 1964, the
!st respondent filed an application in the said court under O.Xl,
r. 21, of the Code, read with O.XXIX, r. 3, thereof, for striking off
the defence or in the alternative for directing Jugal Kishore, a
E
director of the Appellant-company, to appear in court on December
14, 1964. On December 3, 1964, the court made an order therein
directing the said Jugal Kishore to be present in court on December
14, 1964, to answer material questions relating to the suit. The
appellant took a number of adjournments to produce the said
Jugal Kishore on the ground that the latter was ill. On February 3,
1965, the court gave the appellant a final opportunity to produce
F
the said Jugal Kishore. Even so, the appellant took two more
adjournments to produce him, but did not do so on the ground
that he was ill. Finally on February 25, 1965, the court issued a
notice to the I st defendant, appellant herein, to show cause why
his defence should not be struck off. On March 16, 1965, after
hearing the arguments the court held that J ugal Kish ore had failed
G
to comply with the orders of the court and was persistent in his
default in spite of chances given to him; and on that finding, it
struck off the defence of the appellant. The High Court, on revision, held that Jugal Kishore did not appear in court in spite of
orders to that effect and that the learned Subordinate Judge had
jurisdiction to strike out the defence of the appellant. It further
H
negatived the contention of the appellant that it was not in it'
power to compel Jugal Kishore to appear in court on the ground
that he was the director of the company and was under its control
and, therefore, the appellant-company could not be heard to say
M12Sup. CI/66 ·- 9
858
SUPRl!MI! COUIT REPORTS
[1966] 3 S.C.R.
that one of the directors did not obey the orders of the court. Hence
A
the present appeal.
The argument of Mr. S, N. Andley, learned counsel for the
appellant, may te briefly stated thus: The Code of Civil Procedure
provides express powct' for a court to strike out defence against a
party under specified circumstances and, therefore, s. 151 thereof
cannot be invoked to strike out the defence in other circumstances.
for to do so will be to override the provisions of the Code. Order
XXIX, r.3, of the Code does not empower the court to require the
presonal appearance of a director other than a director who signed
and verified the pleading within the meaning of O.XXIX, r. I,
thereof.
Mr. Sen, learned counsel for the respondent, on the other hand,
contended that the court had ample jurisdiction to strike out the
defence of a party if he was guilty of abuse of the process of the
eourt. In the instant case, he contended Jugal
Kishore, one
of the permanent directors of the appellant-company had adopted
a recalcitrant attitude in defying the orders of the court to be
present for interrogation and, therefore, the Subordinate Judge
rightly, after giving ewry opportunity for him to be present, struck
off the appellant's defence.
Section 151 of the Code reads:
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"Nothing in this Code shall be deemed to limit or otherwise affect the inherent power of the court to make such
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orders as may be necessary for the ends of justice or to
prevent abuse of the process of the Court."
The words of the section appear to be rather wide. But the decisions
of this Court, by construction, limited the scope of the said section.
In Padam Sen v. The State of Vilar Pradesh (1) the question raised
was whether a M unsif had inherent powers under s. 151 of the Code
to appoint a commissioner to seize account books. This C,ourt
held that he had no such power.
Raghubar Dayal, J., speaking
for the Court, observed:
"The inherent powers of the Court are in addition
to the powers specifically conferred on the Court by
the Code. They are complementary to those powers and
therefore it must be held that the Court is free to exercise
them for the purposes mentioned in s. 151 of the Code
when the exercise of these powers is not in any way in
conflict with what has been expressly provided in the
Code or against the intentions of the Legislature. It is
also well recognized that the inherent power is not to
be exercised in a manner which will he contrary to or
(I) {t961J I S.C.R BS4, ES7.
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RAMCHAND MILLS v. K. L. BHARGAVA (Subba Rao, J.) 859
different from the procedure expressly provided in the
Code".
This Court again in Manohar Lal Chopra v. Rai Bahadur Rao Raja
Seth Hira/a/(') considered the question whether a court had inherent power under s. 151 of the Code to issue a temporary injunction restraining a party from proceeding with a suit in another
State. In that context, Raghubar Dayal, J.,
after quoting the
passage cited above from his earlier judgment, interpreted the said
observations thus:
"These observations clearly mean that the inherent
powers are not in any way controlled by the provisions
of the Code as has been specifically stated in s. 151 itself.
But those powers are not to be exercised when their
exercise may be in conflict with what had been expressly
provided in the Code or against the intentions of the
Legislature. This
restriction, for practical purposei,
on the exercise of these powers is not because these powers
are controlled by the provisions of the Code but because it
should be presumed that the procedure specifically provided by the Legislature for orders in certain circumstances
is dictated by the interests of justice."
This Court again in Arjun Singh v. Mahindra Kwnar(Z) considered the scope of s. 151 of the Code. One of the questions raised
was whether an order made by a court under a situation to which
O. IX, r. 7, of the Code did not apply, could be treated as one
made under s. 151 of the Code. Rajagopala Ayyangar, J., made
the following observations:
"It is common ground that the inherent power of
the Court cannot override the express provisions of the
law. In other words, ifthere are specific provisions of the
Code dealing with a particular topic and they expressly
or by necessary implication exhaust the scope of the powers
of the Court or the jurisdiction that may be exercised in
relation to a matter the inherent power of the Court
cannot be invoked in order to cut across the powers conferred by the Code. The prohibition contained in the Code
need not be expressed but may be implied or be implicit
from the very nature of the provisions that it makes for
covering the contingencies to which it relates."
Having regard to the said decisions, the scope of the inherent
power of a court under s. !SI of the Code may be defined thus:
The inherent power of a court is in addition to and complementary
H
to the powers expressly conferred under the Code. But that power
will not be exercised if its exercise is inconsistent with, or comeo
(I} [1962] Supp.
I S.C.R. 450, 461.
2) [1964] 5 S.C.R. 946, 968.

RAMCHAND MILLS V. K. L, BHARGAVA (S11bba Rao, J.) 861
A
If so, there is no reason why the director who may be able to answer
such material questions is excluded from the scope of r. 3. Such an
interpretation will defeat the purpose of the said rule. Therefore,
"any director" in r. 3 need not be the same director who has signed
and verified a pleading or on whom summons has been served.
He can be any one of the directors who will be in a postition to
B
answer material questions relating to the suit.
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Even so, learned counsel for the appellant contended that
O.XXIX, r. 3, of the Code did not provide for any penalty in case
the director required to appear in court failed to do so. By drawing
an analogy from other provisions where a particular default carried
a definite penalty, it was argued that in the absence of any such
provision it must be held that the Legislature intentionally had not
provided for any penalty for the said default. In this context the
learned counsel had taken us through O.IX, r. 12, 0. X, r. 4, 0.XI,
21, O.XVI, r. 20, and 0. XVIII, rr. 2 and 3 of the Code. No
doubt under these provisions particular penalties have been provided for specific defaults. For certain defaults, the relevant
Orders provide for making an ex partc decree or for striking out the
defence. But it does not follow from these provisions that because no
such consequential provision is found in O.XXIX, the court is
helpless against a recalcitrant plaintiff or defendant who happens
to be a company. There is nothing m O.X,XIX of the Code.
which, expressly or by necessary implication, precludes the exercise
of the inherent power of the court under s. 151 of the Code. We are,
therefore, of the opinion that in a case of default made by a director who failed to appear in court when he was so required under
O.XXIX, r. 3, of the Code, the court can make a suitable conse--
quential order under s. 151 of the Code as may be necessary for
the ends of justice or to prevent abuse of the process of the court.
The next question is whether the court can, as it did in the
present case, strike off the defence of the appellant for the default
made by its director to appear in court. Learned counsel for the
respondent contended that both the courts in effect found that the
director was guilty of a recalcitrant attitude and that he had abused
the process of the court and, therefore, the Subordinate Judge
had rightly exercised his inherent power in striking off the defence
of the appellant, We are satisfied, as the courts below were, that
Jugal Kishore, the director of the appellant-company, purposely
for one reason or other, defied the orders of the court on the pretext of illness and had certainly abused the process of the court.
The learned Subordinate Judge would have been well within his
rights to take suitable action against him, but neither of the courts
found that the appellant was responsible or instrumental for the
director not attending the court. Unless there is a finding of
collusion between the appellant and the director in that the former
862
SUPREME COURT REPORTS
[1966] 3 S.C.R.
prevented the latter from appearing in court, we find it difficult
to make the company constructively liable for the default of one
of its directors. Many situations may be visualized when one
of the directors may not obey the directions of the company or its
hoard of directors or may be even working against its interests.
It cannot be disputed that a company and the directors of the
company are different legal personalities. The company derives its
rowers from the memorandum of association.
Some of the powers
are delegated to the directors.
1-'or certain purposes they are said
to be trustees and for some others to he the agents or managers of
the company.
It is not necessary in this case to define the exact
relationship of a director qua the company. The acts of the directors within the powers conferred on them may be binding on the
company.
But their acts outside the said powers will not bind the
company. It is not possible to hold that the director in refusing to
respond to the notice given by the court was acting within the scope
of the powers conferred on him.
He is only liable for his acts and
not the company.
If it was established that the company was
guilty of abuse of the process of the court by preventing the director
from attending the court, the court would have been justified in
striking off the defonce.
But no such finding was given by the
courts below.
The orders of the courts below arc· not correct. We set aside
the said orders and direct the Subordinate Judge to proceed with
the suit in accordance with law.
The appeal is~ allowed, hut. in the circumstances of the case.
without costs.
Appeal a/1011 ""
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