# SUPREME COURT REPORTS[l964]VOL. LADLI PRASAD JAISWAL v. KARNAL DISTILLERY CO., LTD., & ORS

- **Citation:** [1964] 1 S.C.R. 270
- **Court:** Supreme Court of India
- **Decided:** 1964
- **Bench:** B. P. SmHA, P. B. Gajendragadxar, K. N. WANCHOn, K. C. Das Gupta ·, j. C. SHAH
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/supreme-court-reports-l964-vol-ladli-prasad-jaiswal-v-karnal-distillery-co-ltd-2897
- **Pages:** 46

## Headnote

Company-Managing Direclor appoinWl an ,.,.,.uiin Unn&-
Ruo/utian remooing
Managing
Direclor
and
appointing
anoth<r-Genera/ lrf eetiTUj-Suhsequent resolution paa•ed canctJl.
ing prwioUo! rt1olwian-8uit by th!, Direclor-FrauJ and undue
inftumce on the part of th!, appellant alleged-Whetli<r firit
appt/late court
1oent far beyond
plP.adirigs-LeUera Patent
Appeal-Certifir.air. undu Art. 133 (1) (a) of lhe Cc>n.1titutianWhether
r.ompelent-"Courl
immediately
below"-Court•
aubordinate-Conatitution of India, Art. 133 (1) (a) and (b)-
Companies Act, 1956(1of1956) s. 155-Code o/Cioil Procedure,
1908 (Acl V of J.908), 88. 100,110,0.6, r. 4-Indian Contrad
Acl, 1872 (9 of 1872) •· 16.
The appellant filed a suit in the Court of the Subordinate
Judge for a declaration that certain resolution. of the directors
and the shareholders in a private limited company passed on
March 3 and 28, 1946, and at the meetings of the Directors
held thereafter were illegal and void and for a declaration that
the reiolutions of October 16, 1945, were operative and in force.
' The respondents resisted the suit contesting that respondents
2 to 5 were coerced by the appellant who took advantage
of his dominating position, into passing the resolutions on
October 16, 1945, and those resolution. were not binding on
the company.
The Subordinate.Judge, held that the written statements
did not contain 'sufficient particulars of the pica of coercion
and undue influence' and that the respondents having failed to
give evidence in support of the plea of coercion and undue
influence, the burden of proving which lay upon them the
appellant's suit must be docrecd.
In appeal the District Court
held that the appellant was in a position to dominate the will
of respondentlo 2 to 5 and he took advantage of that position
and on that account the resolutions relied upon by the appellant
dated October 16, 1945, were vitiated by coercion and undue
influence, and the appellant could not get a decree relying upon
those resolutions. The appellant appealed to the High Court.
A single Judge of the High Court found that the District Judge
1 S.C.R.
SUPREME COURT REPORTS
271
had 'travelled far beyond the pleadings' and therefore his find·
ing• on issue of coercion and fraud could not be upheld. In an
appeal under cl. 10 of the Letters Pat<nt a Division 3ench of
the High Court found that the appellant was in a position to
dominate and had obtained unconscionable advantage and it was
for him to prove that the resolutions of October 16,1945, were
not vitiated by coercion and fraud which burden he had failed
to discharge. They further held that later resolutions of the
company were not binding on the appellant because no notice
was issued to him of the meeting of the company; but no
decree could be granted to him since 'equity declines to lend
its aid to a person whose conduct has been inequitable',
A
certificate of fitness was however granted to appeal to thi• Court
under Art. 133 (I} (a} of the Constitution.
Before this Court, it was urged that the appeal did not
involve any substantial quesion of law and the High Court was
not competent to grant the certificate under Art. 133 (l} (a} and
(b}.
It was submitted that the expression •Court Immediately
lelow' in Art. i 33 meant a court subordinate to the High Court
and a single Judge not being subordinate to a Division Bench of
the High Court the •Court Immedj,ately below' was the District
Court.
Ii eld, that there is nothing in the phraseology used or the
context which justified the view that the expression •Court
immediately below' in Art. 133 (I) of the Constitution is used
in two different senses according as the High Court is trying an
appeal in a proceeding instituted in the High Court in exercise
of the Original Jurisdiction, and a proceeding instituted in
exercise of its appellate jurisdiction. The test for determining
whether an aggrieved party has no right to appeal, other condition~being fulfilled is not whether the judgment is of a court

## Text

_Characters 0–39,598 of 89,603. This is a partial read: ask again with offset=39598 for what follows._

1962
D1ambtr, 11,
270
SUPREME COURT REPORTS[l964]VOL.
LADLI PRASAD JAISWAL
v.
KARNAL DISTILLERY CO., LTD., & ORS.
(B. P. SmHA, C. J., P. B. GAJENDRAGADXAR,
K. N. WANCHOn, K. C. DAS GUPTA ·and
j. C. SHAH, JJ.)
Company-Managing Direclor appoinWl an ,.,.,.uiin Unn&-
Ruo/utian remooing
Managing
Direclor
and
appointing
anoth<r-Genera/ lrf eetiTUj-Suhsequent resolution paa•ed canctJl.
ing prwioUo! rt1olwian-8uit by th!, Direclor-FrauJ and undue
inftumce on the part of th!, appellant alleged-Whetli<r firit
appt/late court
1oent far beyond
plP.adirigs-LeUera Patent
Appeal-Certifir.air. undu Art. 133 (1) (a) of lhe Cc>n.1titutianWhether
r.ompelent-"Courl
immediately
below"-Court•
aubordinate-Conatitution of India, Art. 133 (1) (a) and (b)-
Companies Act, 1956(1of1956) s. 155-Code o/Cioil Procedure,
1908 (Acl V of J.908), 88. 100,110,0.6, r. 4-Indian Contrad
Acl, 1872 (9 of 1872) •· 16.
The appellant filed a suit in the Court of the Subordinate
Judge for a declaration that certain resolution. of the directors
and the shareholders in a private limited company passed on
March 3 and 28, 1946, and at the meetings of the Directors
held thereafter were illegal and void and for a declaration that
the reiolutions of October 16, 1945, were operative and in force.
' The respondents resisted the suit contesting that respondents
2 to 5 were coerced by the appellant who took advantage
of his dominating position, into passing the resolutions on
October 16, 1945, and those resolution. were not binding on
the company.
The Subordinate.Judge, held that the written statements
did not contain 'sufficient particulars of the pica of coercion
and undue influence' and that the respondents having failed to
give evidence in support of the plea of coercion and undue
influence, the burden of proving which lay upon them the
appellant's suit must be docrecd.
In appeal the District Court
held that the appellant was in a position to dominate the will
of respondentlo 2 to 5 and he took advantage of that position
and on that account the resolutions relied upon by the appellant
dated October 16, 1945, were vitiated by coercion and undue
influence, and the appellant could not get a decree relying upon
those resolutions. The appellant appealed to the High Court.
A single Judge of the High Court found that the District Judge
1 S.C.R.
SUPREME COURT REPORTS
271
had 'travelled far beyond the pleadings' and therefore his find·
ing• on issue of coercion and fraud could not be upheld. In an
appeal under cl. 10 of the Letters Pat<nt a Division 3ench of
the High Court found that the appellant was in a position to
dominate and had obtained unconscionable advantage and it was
for him to prove that the resolutions of October 16,1945, were
not vitiated by coercion and fraud which burden he had failed
to discharge. They further held that later resolutions of the
company were not binding on the appellant because no notice
was issued to him of the meeting of the company; but no
decree could be granted to him since 'equity declines to lend
its aid to a person whose conduct has been inequitable',
A
certificate of fitness was however granted to appeal to thi• Court
under Art. 133 (I} (a} of the Constitution.
Before this Court, it was urged that the appeal did not
involve any substantial quesion of law and the High Court was
not competent to grant the certificate under Art. 133 (l} (a} and
(b}.
It was submitted that the expression •Court Immediately
lelow' in Art. i 33 meant a court subordinate to the High Court
and a single Judge not being subordinate to a Division Bench of
the High Court the •Court Immedj,ately below' was the District
Court.
Ii eld, that there is nothing in the phraseology used or the
context which justified the view that the expression •Court
immediately below' in Art. 133 (I) of the Constitution is used
in two different senses according as the High Court is trying an
appeal in a proceeding instituted in the High Court in exercise
of the Original Jurisdiction, and a proceeding instituted in
exercise of its appellate jurisdiction. The test for determining
whether an aggrieved party has no right to appeal, other condition~being fulfilled is not whether the judgment is of a court
subordinate, but whether the judgment is of a court immediately below. The two expressions being different the same considerations do not apply in their interpretation. The certificate
granted by the High Court under Art. 133 (l) (a) and (b} was
competent because a single Judge of the High Court hearing
either a proceeding as a court of original jurisdiction or in exercise of appellate jurisdiction is a co'1!'t immediately below the
Division Bench which hears an appeal against bis judgment
under the relevant clause of the Letters Patent.
TooZ.ey Prasad Bhuckt v. Benayek M;.ser, (1896) L. R. 23
I. A. 102, referred to.
Wahid-wt-din v. Makhan Lal (1944) I. L. R. 26 Lah. 242,
and Debendra
Nath Das v. Bibudhendra Mansingh, (1915)
I. L. R. 43 Cal. 90, disapproved.
1962
Wli Prasad Jaiswal
v.
Kmnol Distillt'Y
Co., Ltd.,
1962
Ldli P.asad J.Uwol
v.
Korul Dislilfny
eo.,w.,
272
SUPREME COURT REPORTS [1964] VOL.
Minna llemher/y v. B. G. Sen, A. I. R. 1927 Lah. 537
and Gopal Vil v. Bolki19an, (1931) I. L. R. 13 Lah. 338,
approved.
Ki .. hanlal Nand/al v. T"ithal Nagayya, I. L. R. 19.55 Nag.
821, rlisapproved.
Held, that a finding that a particular transaction is vitiated
on the ground of undue influence is primarily a finding on a
question of fact.
·
Satg"r Prrui1d v.
liar Narain Da., (1932) L. R. 59
I. A. 147 followed.
The High Court ha. no jurisdktion to entertain a second
appeal "on the ground of an erroneous finding of fact however
gross or inexcusable the error JTlc1.Y seem to be."
M1wamf7lllt
D,.rqa
GhowU.rain
v.
Jawahir Singh
Chowdhri, (1890) L. R. 17 r. A. 122, followed.
But a decision of the first appellate court reached after
placing the onm wrongly resulting in a substanti•l error or
def.ct in the decision of the case on the merits or based on no
evidence is not conclusive and a second appeal lies to the High
Court against the decision.
A pica of undue influence must be precise and all ncce·
ssary particulars in support of that plea must be embodied in
the pleading; if the partir.ulars stated in the pleading arc not
sufficient and specific the court should, before proceeding with
the trial of the suit insist upon the particulars.
Bharat Dlumna Syndicate v. llarish Ch<inclra (1937)
L. R. 64 I. A. 143 dad Bi•ha.das Narain v. Seogeri Rai an'1
JaganiuJJh [1951] S. C.R. 548, followed.
CIVIL APPELLATE JuarsorcTION : Civil Appeal
No. 535 of 1960.
Appeal from the judgment and decree dated
October 18, 1957 of the Punjab High Court in
Letters Patent Appeal No. 100 of 1954.
B. R. Tuli, S. K. Kapur and K. K. Jain, for
the appellent.
1 S.C.R.
SUPREME COURT REPORTS
273
M. 0. Setalvad,
A. N. · Khanna
and
respondents.
AttorruJy·General for India,
1961
Harbans
Singh!_ for _!he Lalllh-4I"'-·
...
K-1 DUll/!117
c..,w.
The Judgment of the
I 962. December 17.
Court was delivered by
SHAH, J.-One Kishori Lal Jaiswal started a
sw, 1.
'distillery business' in the name of Kishori Lal &
Sons and set up a factory at Kamal in the Punjab
for manufacturing liquor. Kishori Lal died in 1928
leaving him surviving three sons, Durga Prasad, Ladli
Prasad and Shanti Prasad. Durga Prasad who was
the eldest "Surviving member became karta of the Joint
Hindu family, and continued the family business.
On the death of Durga Prasad in 1934 leaving him
surviving two sons Sajjan Lal and Madan Lal and
his wife Suraj Mukhi, Ladli Prasad became the
'karta' of the family and continued the business. By
mutual arrangement on November 5, 1940 the Joint
Hindu Family of three branches was disrupted ;md the
business of Kishori Lal & Sons was thereafter con·
ducted as a partnership concern each branch having
a third share therein. On March 23, 1941 a private
limited company called the Kamal Distillery Com·
pany Ltd. was incorporated under the Indian Companies Act, 1913, and the business of Kishori Lal &
Sons was taken over by that Company. Under the
final allotment of shares made by the Company
on August 1, 1941-1005 shares were allotted to the
branch ofDurga Prasad, 1503 shares to Ladli Prasad
and 1003 to Shanti Prasad.
By the Articles of
Association the maximum number of Directors was
five and the minimum number was two.
Ladli
Prasad, Shanti Prasad and Suraj Mukhi were
appointed as the first Directors of the Campany.
Every year one ·third of the Directors except the
Managing Directors were to retire by rotation. Ladli
Prasad was appointed Managing Director for ten
years with the right to continue for another ten years
•
, '
·-.--/-,'...-...-:---·,,. i\
'
/ ';. -- '
{
.'-'
· ... 274 SUPREME COURT REPORTS [1964] VOL.
'-. · 1962 .
unless a notice of fifteen days-within · eight years
i.n; Prasad Jaiswal was · given by a two-third majority at a special·
general meeting held for the purpose of temiinating
his appointment as Managing Director, and that twothird of the total, .number of members could expel a
member of the Company.
Ladli. Prasad as Managing Director of the Company drew an allowance of
Rs. 1,800/- per month, . a. ·commission of 7! per· cent
on net profits.of the Company, a motor-car allowance
..
K arnal Dis till"'
'
Co., Ltd. .
·
Sliah, J.
., . '•
.·. '·
of Rs. 350/--per month with a right to be provided
a new motor-car every three years for personal use and
Rs. 30/· per day as travelling allowance .. The other
Directors of the Company · were. paid remuneration
at the • .trate . of Rs. 250/- per month, · and each
. Director who· ·attend ; the 'meeting of the Board of
Directors was allowed.in addition Rs:.25/-per day; ..
:;~ .. :.
,:,.~=,·'
_\
.'::.-,
·._..:
-.--,,.-·,
· ; ; · Manifestly there 'was great disparity between
the remuneration received ·.by Lad Ii : Prasad and the
othei: . Directors, : and ·. this 'gave rise to quarrels
between the members of the family. At an e·xtraordinary ·general·; meeting ·.•of> the·, Company held ori
February 20, 1945 at which Shanti Prasad, Sajjan
Lal, Madan Lal and Suraj · Mukhi were present, : it
was resolved that Ladli Prasad'. be removed from his
office of Managing. Director and that Shanti Prasad
' ·
. be appointed Managing Director instead: . But Ladli
Prasad declined to -hand over charge of the Manag·
ing Director's office to Shanti 'Prasad.
A suit was
thereupon filed by .Shanti Prasad· in the Court of the
SubordinateJudge;Karnal,·on :behalf of the Com·
pany against Ladli Prasad. on- April 10, 1945 for a
declaration that he was ]awfully appointed Manag-
. ing Director of the Company and for enforcing the·
resolution dated February 20, 19!5. Ladli Prasad in
his turn filed a. suit for a declaration that· Shanti
Prasad had ceased to be a· Director of the Company~
. . ____ In the suit filed by Shanti Prasad on behalf. of the ·
Company, the trial Court appointed Suraj Mukhi and
· Madan Lal as joint : rec:eivers. to manage the affairs, - -
•
l S.C.R.
SUPREME COURT REPORTS 275
of the Company for the duration of the suit. Against
that order Ladli Prasad appealed to the High Court
of Judicature at Lahore and obtained an order staying the operation of the order appointing receivers.
On October 16, 1945 at an extraordinary general
meeting of the Company held at the residence of
Ladli Prasad at which all the members of the family
were present certain special resolutions were passed.
The effect of the resolutions was that :-
(1) That each branch of the family should own
1170 shares and for this purpose Ladli
Prasad should transfer 167 shares to Shanti
Prasad and 1 f)6 to the branch of Durga
Prasad.
(2)
Resolution dated February 20, 1945 pur·
porting to remove Ladli Prasad from the
Managing Directorship was cancelled.
(3) Resignation of Ladli Prasad of his post as
Managing Director was accepted, and he
was appointed permanent Director and
Chairman, and Madan Lal son of Durga
Prasad was appointed Director in place of
Suraj Mukhi who submitted her resig.
nation.
Shanti Prasad continued to be a
Director of the Company.
(4) The maximum number of Directors was
fixed at three and the quorum of the
Directors' me~ting was also fixed at three.
(5) Every decision submitted to a meeting of
the Directors or members was to be deemed
to be passed only if the decision thereon be
unanimous, and the proceedings recorded
being signed by the Chairman of the
Company and all the Directors or the
mem hers, as the case may be, present at
the meeting.
1961
Ladli Prasad Jaiswal
v.
Kamal Distillery
Co., ltd.
Shah, J.
276
1962
Lodli Prasod I aiswal
••
Karnol Dist;u,,_,
c..,w.
>ltoh, I.
SUPREME COURT REPORTS[l964] VOL.
(6) Shanti Prasad was arpointed Manager for
five years under the control of the Board
of Directors .
(7)
Article 47 which gave power to a two·
third majority to expel a member of the
Company was deleted.
(8)
Each Director was to be paid Rs. 900/-
per month as remuneration and Rs. 25/-
for
each meeting of the
Board
of
Directors attended. No extra remuneration
to be paid to Shanti Prasad as Manager
or to Ladli Prasad as Chairman.
(9)
Ladli Prasad gave up the remuneration
which had been provided for him under
the Articles of Association as originally
framed and he was discharged in respect of
all previous accounts which were ratified
and confirmed.
(10)
(ll)
(12)
All contracts executec, business done,
benefits derived by Ladli Prasad under the
facilities granted to him by resolution
dated April 30, 1941 of the Board of Directors were confirmed and ratified and all
transactions recorded in the accounts of the
Company for the period April l, 1941 till
the date of the resolution were ratified and
it was resolved that the accounts of each
of the four years ending March 31, 1942,
1943, 1944 and 1945 be confirmed.
Dividend at the rate of 65 per cent of the
face value of the share free of income-tax
was declared.
While ratifying and confirming the contracts executed,
business done, benefits
derived in the name, or from the Company
1 S.C.R.
SUPREME COURT REPORTS
277
(13)
by any Director or the Managing Director
of the Company in the past, it was resolved that in future no Director of the Company will contract in the name of the
Company for his personal benefit.
A large number of Articles of Association
of. the Company were amended in order
to make them consistent with the special
resolutions.
Effect was given to these resolutions. Shanti Prasad
assumed the office of Manager of the Company and
took charge of the Company's properties, assets and
business.
Re-adjustment in share-holding of the
members was also effected, Ladli Prasad having
transferred the shares according to the terms of the
resolution. But disputes started afresh. In a meeting of the Board of Directors held on March 3, 1946,
at which Shanti Prasad and Madan Lal were present,
it was
resolved to call an extraordinary general
meeting of the share-holders of the Company on
March 28, 1946 to consider a requisition received
from Suraj Mukhi and Madan Lal for cancelling
some of the special resolutions passed at the meeting
held on October 16, 1945. No notice of this meeting
was given to Ladli Prasad. At the meeting held on
March 28, 1946-in the absence of Ladli Prasadseveral
resolutions were passed to
the effect
that, all amendments
made in the Articles of
Association by the resolutions dated October 16, 1945
do stand cancelled and the original Articles of
Association of the year 1941 (including Art. 47 which
authorised the Company by a 2/3rd majority to
expel any member) do stand restored. It was also
resolved that Ladli Prasad be removed from the directorate and Chairmanship of the Company, and in
his place Suraj Mukhi be appointed Director of the
Company at a ~emuneration of Rs. 900/- per month;
that Shanti Prasad be appointed Managing Director
1962
Ladli Prasad Jai~wal
v.
K arnol Distillery
Co,Ltd.
Shah, J.
1962
lAdJi 1-rOJad Jaiswal
v.
Kamal Distil/tr,,
Co., Lid.
Shnli, J.
278 SUPREME COURT REPORTS (1964) VOL.
for ten years, such appointment not being liable to
term.i..nation earlier by the members; and that Shanti
Prasad do receive in addition to his remuneration as
Director Rs. 1000/- per month as Managing Direct<•r,
a travelling allowance of Rs. 30/- per day and a
motor-car allowance of Rs. 200/- per month.
Coming to know about these amendments,
Ladli Prasad called upon Shanti Prasad and the other
members of the Company to rescind the resolutions,
and failing to induce them to comply with the requisition, he filed a petition on May 1, 1946 in the High
Court of Judicature at Lahore for an order for
winding up the Company.
An order for winding
up the Company was passed by a single Judge, but
was set aside in appeal by the High Court of Lahore
by its order dated January 19, 1956.
On November 26, 1946, Ladli Prasad filed
a suit in the Court of the Senior Subordinate Judge,
Karna! for a Jeclaration that the meeting and proceedings of the Board of Directors dated March 3, 1946,
and the extraordinary
general meeting dated
March 28, l!J46, and all meetings of the Directors
held after March 28, Hl46 were illegal, ultra i·ires,
ineffective and operated as a fraud on the Company
and the interests of minority members of the Company and that the unanimous resolutions of the extraordinary general meeting dated October 16, 1945,
continued to remain in force and were still operative,
and a permanent injunction restraining the Company,
Shanti Prasad, 8uraj
Mukhi,
Sajjan
Lal and
Madan Lal (who were impleaded re-spectively as defendants 1 to 5) from acting upon or carrying into
effect the resolutions passed in the meetings dated
March 3, 1946 and March 28, 1946 and all meetings
held after March'28, 19t6.
The defendants by separate written statements
resisted the suit contending inter alia that the defen-
1 S.C.R.
SUPREME COURT REPORTS
279
dants 2 to 5 were coerced by Ladli Prasad taking
advantage of his position, into passing the resolutions
in
the
extraordinary
general
meeting dated
October 16, 1945, and that the resolutions were not
binding upon the Company and the other defendants.
The Subordinate Judge raised a large number
of issues the first of which related to the challenge to
the validity of the resolution dated October 16, 1945,
raised by the defendants on the ground that it was
procured by coercion and undue influence. Even
though the burden of proving the first issue which
was substantially the central issue in the suit was laid
upon the defendants, they did not attend the Court
for examination as witnesses. By his Judgment dated
May 25, 1953, the Subordinate Judge observed that
the written statement did not contain any 'substantial
particulars of the plea of coercion or undue influence',
and that the defendants having failed to submit
themselves to give evidence in support of their plea
of coercion or undue influence despite several opportunities given in that connection, a strong presumption arose against the defendants; that viewed in the
context of the resolution dated February 20, 1945,
passed by the defendants, and the subsequent litigation which ensured between the parties, and the fact
that the resolutions dated October 16, 1945 were
acquiesced in by the defendants and were never attempted to be avoided by resort to a competent court, and
even the allegation that they were Jmproperly procured was made for the first time in the written statement in the suit before him, the plea of undue influence and coercion was not substantiated; and that
the resolutions dated October 16, 1945, were not
invalid. He further held that the resolutions passed
at the Directors' meeting dated March 3, 1946, and
at the extra-ordinary general meeting on March 21!,
1946, were unauthorised and invalid; that by holding
the meeting on March 28, 1946, in breach of the
Articles of Association and the resolutions dated
1952
Ladli Prasad Jaiswal
v.
Karnal Distillery
Co., Ltd.
Skah, J.
lf6Z
Lalli Pr&1.J Jaino.Z
Y.
K1UJtol Distil/try
Co., LJd.
SIWI, J.
280 SUPREME COURT REPORTS [1964) VOL.
'
October 16, 1945, it was intended to play a fraud on
Ladli Prasad by committing a clear breach of the
contract; and that the matter agitated by the plaint
did not relate to the internal management of the
Company. The learned Judge accordingly granted
the relief claimed by the plaintiff for declaration and
injunction.
In appeal by the defendants, the District Judge,
Karna! held that Ladli Prasad was in a position to
dominate the will of defendants 2 to 5 "who were
in a helpless position, being hard hit by the lack of"
adequate financial resources. that they were under
presst!re exercised by the plaintiff induced to give their
consent to the resolutions in the meeting held on
October 16, 1945, and on that account the resolu·
tions were
ineffective.
He observed that Ladli
Prasad took undue advantage of his dominating position qua the affairs of the Comi>any and compelled
the defendants :! to 5 to pass the resolutions and thereby obtained an unfair advantage in that he was absolved from all liability incurred by him in the course
of his management prior to the meeting held on
October 16, 10-15, and that he obtained 'a power of
veto over the affairs and smooth running of the business of the Company'.
The DistrictJudge agre(d
with the trial Court that no proper notice was served
upon Ladli Prasad of the
meetings held on
March 3, 1946, and March 28, 1946, and therefore
the resolutions at those meetings were not binding
upon Ladli Prasad and that in any event the resolutions of those dates were 'a fraud on the minority
rights' and were illegal and ultra vire8, but as the
plaintiff Ladli Prasad had filed his suit relying on the
rci:olution dated October 16, l 945;which was invalid,
no relief could be awarded to him.
In appeal against the decree of the District
Judge dismissing the suit filed by Ladli Prasad,
Bishan Narain, J., of the High Court of Punjab observed that the findings of the District Judge ''travellej
1 S.C.R.
SUPREME COURT REPORTS
281
for beyond the pleadings", and only two facts which
were pleaded were proved by the evidence viz. that the
High Court of Lahore had stayed the order of the Subordinate Judge appointing Receivers of the affairs of
the Company and that.Ladli Prasad was the eldest
male member. The· learned Judge on a review of
the evidence found that Ladli Prasad was not in a
position to dominate the will of defendants 2 to 5
when the resolutions dated October 16, 1945, were
passed and they were the result of a compromise
unanimously accepted, and were binding on the
parties. He c_<1Ilfirmed the view of the trial Court
and the District Judge that the resolutions dated
March 3, 1946, and March 28, 1946, were invalid
because no notice was given to Ladli Prasad of the
proceedings, and in the light of his findings granted
a decree for declaration and injunction as prayed but
subject to the proviso that the decree shall not affect
the rights and liabilities of third parties who were
not members of the Company, unless thereby the
rights of the plaintiff Ladli Prasad, and the Company
were adversely affected.
Against this judgment an appeal was preferred
by the defendants with leave under cl. 10 of the
Letters Patent. In appeal the Division Bench of
the High Court reversed
the decree passed by
'Bishan Narain, J., and dismissed the suit filed by
Ladli Prasad. In the view of the High Court
Ladli Prasad as the elder brother of Shanti Prasad
and uncle of Sajjan Lal and Madan Lal was in a
position to dominate their will and availing himself
of that position he obtained an unfair advantage
over them and that the failure of Shanti Prasad to
submit. himself to examination before the Court in
support of his case though improper could not be
considered as fatal to a decision m favour of the
defendants. They observed :
"I feel convinced that Ladli Prasad was throughout in a position of commanding influence
1962
Ladli PrMad J aiswa I
••
Kamal Distillery
Co., Ltd.
Shali, J.
1962
L44Ji Prasad JoiSUJoJ
••
Kamal Di.rtilltry
c. .. ltd.
Shtih, J.
282 SUPREME COURT REPORTS [1964] VOL.
over his brother and younger nephews, and in
consequence thereof, he benefited himself very
substantially. This superiority and position
of vantage that he occupied continued up to
and even after the 16th October,
1945.
Under the circumstances, it was for him to
rebut the presumption that the benefits which
he had thus obtained did not stem from his
undue influence,
but had been given by the
defendants freely and without any pressure,
or coercion."
They al~o observed that Ladli Prasad was in the
position to dominate the will of defendants 2 to 5
and had obtained unconscionable advantage over
them, and it was for Ladli Prasad to establish that
the resolution dated October 16, 1945 was not
vitiated on account of undue influence and this
Ladli Prasad has failed to establish. They summa·
rised their conclusions on the issue of undue influence
as follows :-
"To sum up, the conclusion of the District
Judge on the first issue to thi! effect that the
resolutions mentioned in para 6 of the plaint
and passed at the· Extraordinary General
Meeting. dated the 16th October, 1945 were
ineffective as having been passed under undue
influence, was a finding of fact; and this conclusion had been arrived at after a review of
the evidence placed on the record and after
having surveyed the facts and circumstances
of the case.
This finding was not based either
on misconception of evidence or by adopting
a procedure contrary to law. Such evidence
as ther:· · is on the record, the history of the
business from its very inception till the final
disputes between the parties, their relationship
inter 8e, and the manner in which the plain·
tiff derived benefit for himself. and the circum-
..
1 S.C.R.
SUPREME COURT REPORTS
283
stances of the case go to show :
(a) that the plaintiff was in a position to
dominate the will of the defendants
and used that position
to obtain
unfair advantage for himself over
the other;
(b) that he held an authority over them
which was real and apparent by dint
of his being formerly a karta and
later on an elder brother in loco
parentis. He stood in a fiduciary
relation to the other standing in a
position of active confidence ;
(c) that the plaintiff in consequence of
the resolutions passed on
the 16th
of October 1945 obtained for himself
unfair advantage to their
serious
detriment by virtue of his position to
dominance and the transactions entered into
on 16th October 1945
appear to be unconscionable ; and
( d) that the burden of proof that the
transactions were not
induced by
undue influence was upon the plaintiff, he being in a position to dominate the will of others which he failed
to discharge."
On the other issues they held that the proceedings
of the resolutions in the meetings dated March 3,
1946 and March 28, 1946 were not binding upon
Ladli Prasad, but the claim made by Ladli Prasad
for a permanent injunction could not be entertained
because "equity declines to lend its aid to a person
whose conduct has been inequitable in relation to
the subject matter of the suit and that if the prayer
1962
La4li Prasad Jaiswc/
y,
/fant41 Distilley
Co., Lrd.
Sluih, J.
Lt/Ii l'r-4 J.U111ol
••
K-1 DUlil/"7
eo.,w.
s"""· '·
284 SUPREME COURT REPORTS [1964] VOL.
of Ladli Prasad was granted, it would result in a
deadlock and the Company's working and affairs
would come to a stand still necessitating the winding
up of the Company." They suggested that it was
open to Ladli Prasad to seek relief available to him
under s. 155 of the Indian Companies Act, 1956
and it was open to Ladli Prasad to invoke the powen
of the Court or of the Central Government under the
Indian Companies Act, if so advised, but the High
Court would not, having regard to the apprehension
of an immediate deadlock, be justified in issuing a
pennanent injunction claimed by him in the suit.
With certificate of fitness granted by the High
Court under Art. 133 (l) (a) of the Constitution this
appeal is preferred. Two questions arise at the
threshold in this appeal :-
{l) Whether it was competent to the High
Court
to grant
a
certificate
under
Art. 133 ( l) (a) or (b) of the Constitution;
and
( 2) Whether in reversing the decree oC the
District Judge, Bishan Narain, J., transgressed the restrictions imposed upon the
powers of the High Court by s. 100 of
the Code of Civil Procedure.
Article 133 (1), in so far as it is material, provides
that an appeal shall lie to the Supreme Court from
any j.1dgment, decree or final order in a civil
P.roceeding of a High Court in the territory of India
if the High Court certifies-
{a) that the amount or value of the subjectmatter of the dispute in the court of first
instance and still in dispu tc on appeal was
and is not less than twenty thousand
rupees or such other sum as may be
1 S.C.R.
SUPREME COURT REPORTS
285
specified in that behalf by Parliament by
law; or
(b) that the judgment, decree or final order
involves directly or indirectly some claim
or
question respecting property of the
like amount or value ; or
( c) that the case is a fit one for appeal to the
Supreme Court;
and, where the judgment, decree or final order
appealed from affirms the decision of the Court
immediately below in any case other than a case
referred to in sub-clause (c), if the High Court further
certified that the appeal involves some substantial
question of law.
The High Court has not certified the case under
sub-clause (c) of Art. 133(1). There is also no dispute that the judgment of the High Court involves
directly some claim or question respecting property
of the value exceeding twenty thousand rupees. The
Attorney-General, however, contended that the jud~
ment of the High Court against which this appeal is
preferred affirms the decision of the court immediately below and the appeal does not involve any
substantial question ·of law and
therefore
the
High Court was not competent to grant the certificate under Art. 133 (l)(a) & (b). It is urged that
an appeal against the judgment of a single Judge to
a Di vision Bench under cl. 10 of the Letters Patent
is a 'domestic appeal' within the High Court and in
deciding whether the decree of a Di vision Bench in
an appeal under the Letters Patent from a decision of
a single Judge exercising appellate jurisdiction affirms
the decision of the Court immediately below, regard
must be had to the decree of the Court subordinate to
the High Court, against the decision of which appeal
was preferred to the High Court. In other words, it
is contended that in this case the decision of the Court
immediately below the Division Bench was the deci·
1962
Ladli PrOJad Jaiswal
y,
Kan111I Dirtillery
Co,, Ltd.
Shah, J.
1961
IAJJi Pros.ul Jaiswal
v.
Kamal Distilln,1
Co., Lid.
Shoh J.
286 SUPREME COURT REPORTS [1964] VOL.
sion of the District Judge and not of Bishan Narain,J.,
this it is contended is so, because the expression
'court immediately below' used in the Constitution
means 'court subordinate, 11nd a single Judge of the
High Court not being a court subordmate to the
Division Bench qua the Division Bench the District
Court was the court immediately below. But the
two expressions have not the same meaning. A court
subordinate to the High Court is a court subject to
the superintendence of the High Court. whereas a court
immediately below is the court from whose decision
the appeal has been filed. If the two expressions are
equated, the ri~ht of appeal against the decree of the
High Court sittmg in appeal over the decision of a
single Judge exercising original jurisdiction would be
severely restricted for in such an appeal whether the
judgment is of affinnance or reversal, the High Court
can certify a case under Art. 133 (1) els. (a) & (b)
only if the appeal involves a substantial question of
law. The Attomey-Genrral, however, concedes and
in our judgment properly that there has been a long
standing practice which has the approval of the
Privy Council (see Tulsi Prasad v. Renayak: L. R.
23 I. A. 102) that if the decree or order of the
Division Bench reverses the judgment of a single
Judge trying a suit or proceeding in exercise of origi ·
nal jurisdiction of the High Court and the condition
as to valuation is satisfied, an appeal lies as a matter
of course, i.e. without satisfying the condition that it
involves a substantial question of law. This view
can be justified only if a single Judge of a High
Court trying a suit or proceedin~ in exercise of the
original jurisdiction is a court immediately brlow
the Division Bench of the High Court which derides
an appeal from his decision. The right to ap pea 1
against the judgm'!nt of a single Judge whether
exercising original jurisdiction or exercising appellate jurisdiction to a Division Bench
is governed
by the same clause of the Letters Patent. If for
certifying a case for appeal to this Court in a pro·
I S.C.R..
SUPREME COURT REPORTS
281
ceeding tried in exercise of the original jurisdiction
the judgment of a single Judge is to be regarded as
the decision of the court immediately below a Division Bench to which an appeal is filed under the
Letters Patent, it is difficult to discover any logical
ground for holding that the judgment of a single
Judge in exercise of appellate jurisdiction is not such
a decision. Clause 10 of the Letters Patent of the
Lahore High Court (which continues to apply to
the Punjab High Court) provides, in so far as it is
material:-
"And we do further ordain that an appeal shall
lie to the said High Court of Judicature
x
x
x
x
x
x
from the
judgment (not being a judgment passed in the
exercise of appellate jurisdiction in respect of
a decree or . order made in the exercise of
appellate jurisdiction by a Court subject to the
superintendence of the said High Court
x
x
x
x
x) of one Judge of the said
High Court
x
x
x
x
x
and
that notwithstanding anything hereinbefore
provided an appeal shall lie to the said High
Court from a judgment of one Judge of the
said High Court
x
x
x
x
x
in the exercise- of appell11te jurisdiction in respect of a decree or order made in the exercise
of appellate jurisdiction by a Court subject to
the superintendence of the said High Court,
where the Judge who passed the judgment
declares that the case is a fit one for appeal;
x
x
x
x."
Manifestly the clause confers an unqualified right of
appeal to the High Court from the judgment of a
single judge exercising original civil
jurisdiction.
Similarly there is a right of appeal from a judgment of
a single Judge hearing a civil appeal where the judgment is not in an appeal from an appellate decree. But
against the judgment of a single judge exercising powers
1962
Ladli Pros•d JoiJ,,,.1
v.
Irarnal Distill1<J
Co., Ltd.
Slaah, J,
1962
Lolli Prasod Jaiswll
v.
KlllMI Distill" y
Co., Ltd.
•/uJ/I, J.
288
SUPREME COURT REPORTS [1964] VOL.
in appeal from an appellate decree, an appeal under
the Letters Patent only lies if the Judge declares that
the case is a fit one for appeal, and not otherwise.
There is no warrant for making a distinction between
an appeal filed against the judgment of a single J uage
exercising original jurisdiction and a judgment in
exercise of appellate jurisdiction.
There is nothing
in the context to support the plea that the expression
'court immediately brlow' includes a Judge of the
ri.igh Court trying a proceeding in exercise of original
jurisdktlon, i. e. sittin1~ as a court of first instance,
but not a Judge exercising appellate jurisdiction.
The Constitution in cl. (1) (a) of Art.
133 hM
expressly referred to a 'court of first instance' in
prescribing the condition relating to the value of the
subject-matter and if it was intended that for the
purpose of deciding whether the judgment of the
High Court sought to be appealed against affirmed
the decision of the Court immediately below, the
decision of a single Judge was to be ignored, if it was
a judgment in exercise of appellate powers, but not
when he was exercising original jurisdiction, an
appropriate provision in that behalf would have been
enacted.
In the absence of any such enactment,
the expression 'court immediately below' in Act. 133
(1) must mean the court from the decision of which
an appeal has been filed to the High Court, whether
such court is a single judge of the High Court or a
Court subject to the superintendence of the High
Court.
In Wahid-iul-din v. Makhan Lal (') a full
Bench of the Lahore High Court (Blacker, J., dissen ·
ting), held that for the purposes of s. 110 of the Code
of Civil Procedure 1908 (which is in material terms
identical with Art. 13:! of the Constitution) a Judge
of a High Court sitting to hear not an original proceeding, but as a court of appeal cannot be considered
a 'court immediately below' the Bench hearing
the Letters
Patent appeal
from his judgment,
(I) [1944] I.L.R. 26 Lah. 24.
1 s.c.R.
SUPREME COURT REPORTS
289
'Din Mohammad, J., delivering the principal judgment of the Court observed at p. 24 7 :
"Wherever any provision is made for an appeal
to the High Court, it is the High Court as such
that is contemplated and not the Court or any
individual Judge or a combination of different
Judges. It is only for the sake of convenience
facility of disposal that some cases are required
to be heard by one Judge and some by more
Judges than one.
The Court accordingly
continues to be the same even if by any domestic arrangement an appeal from one Judge lies
to a Bench of two Judges and must be taken
to be the High Court in either case.
x
x
x ·
x
x
x.
It is obvious
that the authorities dealing with a Judge of the
High Court in the exercise of his original juris·
diction can render no assistance in the disposal
of this matter and it was for this reason that
this distinction was emphasized when the
question was formulated.
A Judge sitting on
the original side is merely discharging the func·
tions of a trial Court and to all intents and
purposes, therefore, he is a Court of first insta·
nee and when an appeal is lodged against his
order, as a Court he is immediately below the
Court which hears the appeal.
Such an
appeal is provided for even in the Code of
Civil Procedure itself as an appeal from an
original decree.
This, however, is not the case
when the same Judge sits on the appellate sicle
and for the purposes of that appeal is the High
Court in himself.
Neither the Code of Civil
Procedure nor the Punjab Courts Act contemplates an appeal to another Court from ·an
order made in the High Court whether by one
Judge or more than one and consequently the
same analogy cannot apply."
1962
lAdJi Prasad Joiswol
"·
Earnol Dillillll'J
Crt. Lhl.
S/r4/J, /,
290 SUPREME COURT REPORTS [1964] VOL.
The learned Judge further observed :
"l cannot reconcile myself to the position th al
a Judge sitting alone can be characterised as
a tribunal inferior to the Letters Patent Bench,
merely because the Bench has power to modify
or reverse his judgment. It is not with an idea
of implying any subordination of the Court of
the Smgle Judge to the Letters Patent Bench
that such an appeal is provided for by Letters
Patent, it is merely with a view to provide a
further safeguard in the interests of the litigant
· that the domestic rules framed by the High
Court permit a case to be heard by a Judge
sitting alone."
Abdur Rahman, J ., agreeing with Din Mohammad,
J., observed :
"x
x
when a suit or proceeding is decided on the original side, it cannot but be held
to have been disposed of by the Court of first
instance and should be of the value of ten
thousand rupees or upwards before an appeal
can be taken to the Privy Council under the
first paragraph of section 110.