# THE ASSOCIATED HOTELS OF INDIA, LTD. AND ANOTHER v. R. B. JODHA MAL KUTHALIA

- **Citation:** [1961] 1 S.C.R. 259
- **Court:** Supreme Court of India
- **Decided:** 1961
- **Bench:** B. P. Sinha, J. L. Kapur, P. B. Gajendra· Gadkar, K. SuBBA RAo, K. N. Wanchoo
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/the-associated-hotels-of-india-ltd-and-another-v-r-b-jodha-mal-kuthalia-2165
- **Pages:** 47

## Headnote

Partition of India-Creation of two Dominions, India and
Pakistan-Formation of new provinces and transfer of territoriesDecree passed by Federal Court of Pakistan-Whether executable in
India-Evacuee laws-Whether affect such decree-The Indian
Independence Act, r947, s. 9-The Indian Independence (Legal
Proceedings) Order, r947, art. 4, els. I, 2, 3-Code of Civil Procedure, r908 (V of r908), 0. 45, r. r5.
On October 2, 1946, the Associated Hotels of India Ltd.,
and its managing director, Mohan Singh Oberoi, appellant l and
2 respectively, entered into an agreement with the respondent
for purchasing certain property from the latter for a price of
Rs. 52,75,000 and paid Rs. 5 lacs as earnest money; but as the
respondent's title to the property was found to be defective the
sale was not completed. The appellants filed a suit in the Court
of Senior Subordinate Judge at Lahore for the recovery of
Rs. 5,10,qf,o which included the earnest money and interest
accruing thereon, and the suit was decreed for Rs. 5,08,333/ 5/ 4
with future interest in favour of appellant No. 2 on March 14,
1949. The claim of appellant No. l was rejected. On appeal
by the respondent the High Court at Lahore reversed the decree
of the trial 'court and dismissed the suit on November 21, 1949·
The Federal Court of Pakistan on appeal by the appellants
allowed the appeal of appellant No. 2 on December 21, 1953,
and restored the decree passed in his favour by the trial court.
After the rassing of the decree by the trial court and before the
decision o the respondent's appeal in the Lahore High Court
the appellants had put the decree in execution which was
stayed at the request of the respondent on condition that the
respondent should deposit Rs. 3,00,000 in the High Court and
furnish security for the balance of the decretal amount. In
course of the execution proceedings and .after the Federal
Court's decree in favour of appellant No. 2 the main question
that arose, inter alia, was whether the deposited sum of
Rs. 3,00,000 should be applied towards the satisfaction of the
decree of the Federal Court and paid to the decree-holder after
transferring it to India or whether the custodian of evacuee property in Pakistan was entitled to the money as evacuee property.
The decree-holder and the judgment-debtor were both agreed
that the money in question vested in the decree-holder and
34
August a3.
260
SUPREME COURT REPORTS
[1961]
1960
should as requested by him be either transmitted to India or
paid to pim. This was resisted by the custodian and the High
The Amcoaled Coutt held that the money could not be transferred to India,
/Jotels nf India, and directed the custodian to report what interest any evacuee
Ltd. l.;. Anolh" had in the money. It was under these circumstances that the
v.
appellants made the present application to the Punjab High
I!. Ii. Jodha Mal Court (India) under 0. 45, r. 15, and s. 151 of the Code of Civil
Kulhalia
Procedure with a prayer for transmitting to the C<:urt of the
Senior Subordinate Judge, Simla, the proceedings between the
parties for execution of the sai<I decree in accordance with the
provisions applicable for execution oi original decrees passed by
the said Judge. Their contention w•s that as a result of the
provisions of Art. 4(3) of the Indian Independence (Legal Proceedings) Order, 1947, the decree passed in favour of appellant
No. 2 bv the Federal Court of Pakistan had become executable
in India as if it had been passed by the Supreme Court of l ndia.
The respondent resisted this on the grounds that the application was not entertainable and the decree could not be executed
in the absence of a certificate as required by 0. 21, r. 6(b) of the
Cede of Civil Procedure, that the decree did not attract the
provisions of Art. 4(3) of the Order and that ihe decree in question having vested in the Custodian appellant No. 2 was not
entitled to execute it. The relevant portion of Art. 4 of the
Indian Independence (Legal Proceedings) Order, 1947,

## Text

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1 S.C.R. SUPREME COURT REPORTS
259
THE ASSOCIATED HOTELS OF INDIA, LTD.
AND ANOTHER
v.
R. B. JODHA MAL KUTHALIA.
(B. P. SINHA, c. J., J. L. KAPUR, P. B. GAJENDRA·
GADKAR, K. SuBBA RAo and K. N. WANCHOO, JJ.)
Partition of India-Creation of two Dominions, India and
Pakistan-Formation of new provinces and transfer of territoriesDecree passed by Federal Court of Pakistan-Whether executable in
India-Evacuee laws-Whether affect such decree-The Indian
Independence Act, r947, s. 9-The Indian Independence (Legal
Proceedings) Order, r947, art. 4, els. I, 2, 3-Code of Civil Procedure, r908 (V of r908), 0. 45, r. r5.
On October 2, 1946, the Associated Hotels of India Ltd.,
and its managing director, Mohan Singh Oberoi, appellant l and
2 respectively, entered into an agreement with the respondent
for purchasing certain property from the latter for a price of
Rs. 52,75,000 and paid Rs. 5 lacs as earnest money; but as the
respondent's title to the property was found to be defective the
sale was not completed. The appellants filed a suit in the Court
of Senior Subordinate Judge at Lahore for the recovery of
Rs. 5,10,qf,o which included the earnest money and interest
accruing thereon, and the suit was decreed for Rs. 5,08,333/ 5/ 4
with future interest in favour of appellant No. 2 on March 14,
1949. The claim of appellant No. l was rejected. On appeal
by the respondent the High Court at Lahore reversed the decree
of the trial 'court and dismissed the suit on November 21, 1949·
The Federal Court of Pakistan on appeal by the appellants
allowed the appeal of appellant No. 2 on December 21, 1953,
and restored the decree passed in his favour by the trial court.
After the rassing of the decree by the trial court and before the
decision o the respondent's appeal in the Lahore High Court
the appellants had put the decree in execution which was
stayed at the request of the respondent on condition that the
respondent should deposit Rs. 3,00,000 in the High Court and
furnish security for the balance of the decretal amount. In
course of the execution proceedings and .after the Federal
Court's decree in favour of appellant No. 2 the main question
that arose, inter alia, was whether the deposited sum of
Rs. 3,00,000 should be applied towards the satisfaction of the
decree of the Federal Court and paid to the decree-holder after
transferring it to India or whether the custodian of evacuee property in Pakistan was entitled to the money as evacuee property.
The decree-holder and the judgment-debtor were both agreed
that the money in question vested in the decree-holder and
34
August a3.
260
SUPREME COURT REPORTS
[1961]
1960
should as requested by him be either transmitted to India or
paid to pim. This was resisted by the custodian and the High
The Amcoaled Coutt held that the money could not be transferred to India,
/Jotels nf India, and directed the custodian to report what interest any evacuee
Ltd. l.;. Anolh" had in the money. It was under these circumstances that the
v.
appellants made the present application to the Punjab High
I!. Ii. Jodha Mal Court (India) under 0. 45, r. 15, and s. 151 of the Code of Civil
Kulhalia
Procedure with a prayer for transmitting to the C<:urt of the
Senior Subordinate Judge, Simla, the proceedings between the
parties for execution of the sai<I decree in accordance with the
provisions applicable for execution oi original decrees passed by
the said Judge. Their contention w•s that as a result of the
provisions of Art. 4(3) of the Indian Independence (Legal Proceedings) Order, 1947, the decree passed in favour of appellant
No. 2 bv the Federal Court of Pakistan had become executable
in India as if it had been passed by the Supreme Court of l ndia.
The respondent resisted this on the grounds that the application was not entertainable and the decree could not be executed
in the absence of a certificate as required by 0. 21, r. 6(b) of the
Cede of Civil Procedure, that the decree did not attract the
provisions of Art. 4(3) of the Order and that ihe decree in question having vested in the Custodian appellant No. 2 was not
entitled to execute it. The relevant portion of Art. 4 of the
Indian Independence (Legal Proceedings) Order, 1947, runs
thus:--
"Notwithstanding the ·creation of certain new provinces
and the transfer of certain territories from the Province of
Assam to the Province of East Bengal by the Ir.dian Indepen-
·c1ence Act, 1947,-
(1) All proceedings pending immediately before the
appointed day in any civil or criminal court (other than a High
Court) in the Province of Bengal, the Punjab or Assam shall be
continued in that court as if the said Act had not been passed,
and that the Court shall continue to have for the purpose of the
said proceedings all the jurisdiction and powers which it had
immediately before the appointed day;
(2) Any appeal or application for revision in respect of
any proceedings so pending in any such court shall be to the
court which would have appellate or as the case may be revisional jurisdiction ever that court if the proceedings \vcre instituted in that court after the appointed day, and
(3) effect shall be given within the territories of either of
the two dominions to any judgment, decree, order or sentence of
any such court in tile said proceedings, as if it had been passed
by a court of competent jurisdiction within the Dominion."
Although the High Court held that the decree sought to be
executed fell under Art. 4(1) of the order and could be executed
under Art. 4(3) of the said order, it came to the conclusion that
I S.C.R. SUPREME COURT R.EPORTS
261
the" Court of competent jurisdiction" was the Senior Subord!-
z960
nate Judge at Simla and that the appellants should have filed
their application under 0. 45, r. 15, Code of Civil Procedure in
The Associated
that Court. The High Court further held that the application Hotels of India,
was incompetent owing to absence of a cert~ficate under 0. 21, Ltd. & A not.lier
r. 6(b), of the Code, that the judgment debt was property and its
v.
situs was Pakistan and that the decree vested in the Custodian R. B. Jodha .'Jal
of Evacuee Property at Lahore and was not executable at the
Kuthalia
instance of the appellants. Consequently the High Court dismissed the appellant's application under 0. 45, r. 25. On appeal
by the appellants on a certificate of the High Court,
Held, (Kapur, J,, dissenting), that the provisions of Art. 4 of
the Indian Independence (Legal Proceedings) Order, 1947, did
not apply to the decree sought to be executed by the appellants.
The pending proceedings to which Art. 4(r) of the order applied
would continue before the specified courts even though the
jurisdiction of the said courts might otherwise have been
affected by the passing of the Indian Independence Act or the
transfer of certain territories. Article 4(1) could not be extended to pending proceedings in respect of which the trial coutt's
jurisdiction was in no way affected by the passing of the Act or
the transfer of any territories.
Appeals would be taken against the judgments or orders
passed in the said proceedings in the same manner in which
they would have been allowed if the Original proceedings had
been instituted after the appointed day.
Protap Kumar Sen and Anr. v. Nagendra Nath Mazumdar,
A.LR. l95I Cal. 5II, Ahidhar Ghose v. Jagabandhu Roy, A.LR.
.r952 Cal. 846, Naresh Chandra Bose v. Saehindra Nath Deb and
Ors., A.I.R. i956 Cal. 222, not applicable.
Per Kapur, J.-The High Court could and should have sent
down the decree in question to the Senior Subordinate Judge,.
Simla, to execute it in accordance with law.
The effect of Art. 4(1) and (3) of the Order was that "all
proceedings" meaning all suits' and other proceedings would
continue unaffected by the passing of the Act and the setting up
of two provinces of West Punjab and East Punjab, and also that
once a decree was passed or sentence pronounced by a court in
either of the new provinces of the two Dominions it was to be
given effect to as if it was a decree or order passed by a Court
of competent jurisdiction in the other Dominion. The amplitude of the language of Art. 4 is not cut down by any words in
the article or the Order.
The meaning of the words "appellate Jurisdiction " as used
in cl. (2) of Art. 4 of the Order is not affected by the subsequent
extension of restriction of the jurisdiction of the Court and the
decree of the Federal Court of Pakistan is covered by these
words.
262
SCPRE!IIE COURT REPORTS
[1961]
'960
The word "effect" in cl. (3) of Art. 4 is wider than the
worr!s "enforce" or "execute" and is not equivalent to "being
The A.s.sociattd enforced " by suit on a foreign judgment.
Hottl!; of India,
Cl
f h A
· ·
h
f
d
'
ausc 3 o t e rt. 4 is m t e nature o a eemrng clause
1.td. ~· A11r,tJier and makes the decree of the Pakistan Court (\Vest Punjab) a
v.
1 decree of a court of competent juns<liction in East Pun;~b
R. B. Jodha Ma (India).
·
Kulholia
s·
f h d
p k'
b
1tus o t e ecree was not a 1stan alone but
y a fiction
of law the decree was a decree of a court of competent jurisdiction in what was the Dominion of India.
The provisions of the evacuee law in Pakistan would not
affect the rights of the appellant to execute the decree in question in India.
CIVIL APPELI,ATE
JURISDICTION : Civil
Appe&l
No. 320/58.
Appe&l from the Judgment 11.nd Order d&ted the
22nd Jsnu&ry, 1957, of the Punjab High Court in
-
Civil Misc. No. 24/C of 1955.
D. N. Pritt, S. N. Andley, J. B. Dadachanji and
P. L. Vohra, for the Appellants.
C. K. Dapht.ary, Solicitor-General of India, A. V.
Viswanatlia Sastri &nd Naunit Lal, for the Respondent.
1960. August 23. The Judgment of B. P. Sinha,
C. J., P. B. Gajendragadkar, K. Subba Rao, and K. N.
Wanchoo, JJ., was delivered by Gajendragadkar, J.
Kapur, J. delivered a. separate Judgment.
Gaj••dragodkar ].
GAJENDRAGADKAR J.-The Associated Hotels of
Indi& Ltd., a.nd its Managing Director Mohan Singh
Oberoi (herea.fter called 11.ppellants l and 2 respectively) had filed an a plication in the High Court of Punjab
under 0. 45, r. 15 of the Civil Procedure Code for
executing a. decree pa.ssed by the Federa.I Court of
Pa.kista.n in favour of a.ppellant 2 and against Jodha
Ma.l Kuthalia (herea.fter ca.lied the respondent). The
sa.id application wa.s dismissed but, on a.n application
made by tho a.ppellants under Art. 133(1) (a.) a.nd (c)
of the Constitution, the sa.id High Court granted a
certificate to the appellants a.nd it is with the sa.id
oertifioa.te that they have preferred the present a.ppea.l
before this Court.
1 S.C.R. SUPREME COURT REPORTS
263
It is necessary at the outset to state the material
r96o
facts leading to the appellants' application before the The Associated
High Court under 0. 45, r. 15. It appears that by an Hotels of India,
agreement dated October 2, 1947, the respondent had Ltd . .s. Another
agreed to sell to the appellants certain property
v.
known as Nedous Hotel at Lahore for Rs. 52,75,000. R. B. Jodha Mal
In pursuance of the terms of the said agreement the
K uthalia
appellants had, paid the respondent Rs. 5,00,000 by Gajendrogadkar J.
way of earnest money. It, however, turned out that
t,he respondent's title to the property in question was
defective, and so the sale could not be completed.
That is why the appellants had to fi!e a suit in the
court of the Senior Subordinate Judge at Lahore
claiming to recover from the respondent a sum of
Rs. 5,10,000 ; this amount included Rs. 5,00,000 pa.id
by the appellants to the respondent as earnest money
and interest accrued due thereon up to the date of the
suit. In the said suit the trial judge passed a decree for
Rs. 5,08,333.5-4 with future interest thereon at 5%
per annum in favour of appellant 2. The claim ma.de
by appellant 1 was rejected. _ This decree was challenged by the respondent before the Lahore High
Court. The High Court upheld the contentions raised
by the respondent, allowed his appeal,· set aside the
decree passed in favour of appellant 2 and dismissed
the appellants' suit with costs. This decree led to an
appeal by the appellants before the Federal Court of
Pakistan. The Federal Court in turn allowed the
appeal in favour of appellant 2 and restored the decree
passed in his favour by the trial court. This decree
was passed on December 21, 1953. The present
applica,tion made by the appellants in the Punjab
High Court under O. 45, r. 15 is intended to obtain
the execution of this decree.
While the litigation between.the appellants and the
respondent was thus proceeding in the courts in
Pakistan certain other events took place in regard to
the execution of the said decree to which reference
must now be made. After the trial court had. passed
its decree and before the date of the decision of the
Lahore High Court, the appellants had put the decree
in execution and thereupon the respondent had
264
SUPREME CO"l:RT REPORTS
[1961]
1960
applied for stay of the se.id execution before the
Th• Asscciafr<I Lahore High Court. On the said application the Le.bore
lfotels of India, High Coun ordered tha.t tho execution taken out by
Ltd. & Anothu the a.ppolla.nts should be stayed on conrlition that
v.
the respondent should deposit a. sum of Rs. 3,00,000 in
R. B. Jo-tho Mal the High Court and furnish security for the bale.nee
K•1••1••
of the decretal amount. In accordance with this
G . -d-----::,.
1 order the respondent deposited the amount a.nd furnia;t1n rag''"·"'""
.
h
.
S
shed t e security.
ubsequently when the Lahore
High Court allowed the rE18pondent's appeal he applied
for a. refund of the amount already deposited by him,
e.nd his application was allowed on December 16,
1949. On the same day, however, the Lahore High
Court directed that information of its order allowing
the respondent to withdraw the a.mount should be
ginn to the Custodian. The Custodian then moved
the High Court on December 20, 1949, for a review of
its order on the ground tha.t the amount in question
was evacuee property a.nd as such it vested in him.
These proceedings were pending before the High Court
when the appellants had ta.ken their appeal before the
Federal Court of Pakistan age.inst the High Court's
decision.
After the Federal Court decreed the claim of appellant 2 the said proceedings were taken up before the
High Court for fine.I disposal.
At this stage the respondent made an application before the High Court
that the deposit of Its. 3,00,000 should be applied
t-0wards the satisfaction of the decree passed by the
Federal Court in favour of appellant 2 and he stated
that ho wanted to withdraw his previous application
for the return of the sa.id deposit (H. F. A. No. 31 of
1949).
Similarly appellant 2 filed a. Civil Miscellaneous
Application (No. 120 of 1954) praying that the a.mount
of Rs. 3,00,000 deposited by his judgment-debtor
Hhould be transferred to India., or that, if it could not
bo so transferred, it should be held that the Custodian
was not ontitlocl to the said a.mount a.ncl so it should
be pa.id to the decree-holder at La.bore, or that it
should be pa.id to such perso.n other than the Custodian a.s ma.y be entitled to it. These two a.pplioations
1 S.C.R. SUPREME COURT REPORTS
265
along with the original petition filed by the Custodian
r96o
for a review of the High Court's original order allowThe Associated
ing a refund to the respondent were heard together Hotels of India,
by the High Court.
•
Ltd. & Another
The High Court noticed that both the judgment-
. v.
debtor and appellant 2 agreed that the amount in R. B. Jodh~ Mal
question vested in the decree-holder and should either
Kutha/,.
be transmitted to India or paid to him. The Custo- G . d--dk 1
.
.
d
f h
a1en raga
ar
.
dian, however, resisted this prayer. Un er s. 4 o t e
Pakistan Transfer of Evacuee Deposits Act, 1954, a
deposit made in a civil proceeding to which an
evacuee . was entitled and in which no
muslim
was interested could be transferred to India provided that if the court was satisfied that if any of the
persons interested in the deposit was not an evacuee
the deposit shall not be transferred. It was under
the provisions of s. 4 that appellant 2 had claimed a
transfer of the deposit on the allegation that he was
an evacuee; The High Court, however, proceeded to
consider whether the amount of Rs. 3,00,000 belonged
exclusively to appellant 2, and held that on going
through the record it was satisfied that though the
decree stood in the name _of appellant 2 the amount
really belonged to the Associated Hotels Limited, and
it observed that it was not denied that among the
shareholders of the Associated Hotels Limited there
were muslims and non-evacuees. It was urged before
the High · Court by appellant 2 that since the decree
stood in his name he alone could execute it and no
question as to the title of appellant 1 could arise in
the proceedings before ·the court. Curiously enough
this contention was negatived and appellant 2's prayer
for the transfer of deposit was rejected. How the
High Court could have considered the question of the
title of appellant 1 in view of the decree passed by
the Federal Court it is difficult to appreciate. However, on the view that it took the High Court came to
the conclusion that since appellant 1 some of-,whose
shareholders were muslims and non-evacuees· was
entitled to the deposit appellant 2 was not entitled to
claim the transfer of the deposit. to India.. In t.he
result the High Court allowed the application of the
266
SUPRE)1E COCRT REPORTS
[1961]
i96o
Custodian and set a.side its earlier order for refund in
favour of !,he res1iondent. In regard to the other two
The A.Hociated
Hotels of India. prayers made hy appellant 2 the High Court observed
ua . .s- Another that under s. 34 of the Pa.kiNta.n Administration of
v.
Evacuee Property Ordinance it was only for the
R. R. Jodh• .'.fat Custodian to consider what interest., ifa.nv, an evacuee
Kuthali•
had in the deposit in dispute, and so it !~ft that quesGa;end;;.~~dkar 1. tion to be determined by the Custodian, and directed
- that the said prayers ma.de by appellant 2 would have
to be <leoided a.ft-0r issuing notice to the Custodian and
after the Custodian returns his finding on the issue
framed hy it. This order was passed on January 30,
1956. It is under these circumstances that the appellants ma.de the present application to the Punjab
High Court under 0. 45, r. 15 of the Code.
The case for the appellants was that as a result of
the provisions of s. 4(3) of t.he Indian Independence
(Legal Proceedings) Order, 1947 (hereBfter called the
Order), the decree passed in favour of appellant 2 by
the Federal Court of Pakistan had become exec11ta.ble
in India as if it had been passed by the Supreme Court
of India. On this ba.Ais the provisions of 0. 45, r. 15
of the Code were invoked and the High Court was
requested to transmit to the Court of the Senior Subordinate Judge, Simla., the proceedings between the
parties for execution of the said decree in the manner
and according on the provisions applicable to the
execution of the original decree passed by the said
Judge. An alternative prayer was ma.de for the same
order under the High Court's inherent jurisdiction
under s. 151 of the Code.
This application was resisted by the respondent on
several grounds. It was urged that neither 0. 45, r. 15
nor s. 151 of the Code was applicable, that the decree
could not be execut.ed, and the application made by
the appellants in that behalf could not be entertained,
in the a.bsem.-e ofa. certificate required by 0. 21, r. 6(b),
that the decree in fa.ct did not attract the provisions
of s. 4(3) of the Order and that appellant 2 was not
entitled to execute it because the decree under execution had vested in the Custodian of Evacuee Property
at Lahore.
l S.C.R. SUPREME COURT REPORTS
267
The High Court has held that the decree sought to
r96o
be executed fell under s. 4(1) of the Order and thus Th
A
. 1 ,
•
e
ssocia eu.
could be executed under s. 4(3) of the said Order. Asa. Hotels oj India
result of these findings the appellant was held entitled Ltd. & Anothe;
to invoke the relevant provisions of the Order. The
v.
High Court however came to the conclusion that the R. B. Jodha Mal
court of cokpetent j~risdiction specified in s. 4(3) was
Kuthaha
in the context of the relevant facts in the present ca.sec . d-a-dk 1
h
C
f
S
.
S .
d.
J d
s· I
a1en r ga
ar .
t e
ourt o the emor , uuor mate u ge at 1m a
and that the appellants should have filed their application before tha.t court. The High Court also took the
view that ~he present application was incompetent for
the additional rea.son that the certificate of non-sa.tisfaction had not been filed along with the application
as required under 0. 21, r. 6(b). According to the High
Court the judgment-debt was property and its situs
was Pakistan. The result of these findings was that
under the Pa.kista.n law the decree vested in the
Custodian of Evacuee Property at Lahore, and so it
was not executable at the instance of the appellants.
On these findings the application ma.de by the appellants was dismissed. In the present appeal Mr. Pritt
has challenged the correctness of these findings.
Mr. Pritt contends that the expression " a court of
competent jurisdiction" in s. 4(3) of.the Order must
mean a court which can pass the decree under execution and that inevitably must mean the Supreme Court
of India, because the decree under execution is a decree
passed by the Federal Court of Pakistan. According
to him the High Court was in error in holding that the
appellants should have produced a certificate of nonsatisfactioq because the provisions of 0. 45, r. 15 do
not require such a certificate. If the decree under
execution has to be regarded as one passed by the
Supreme Court of India the provisions of 0. 45, r. 15
should have been applied and no additional limitations imposed on the appellants. Mr. Pritt conceded
. that the judgment-debt is property but disputed the
correctness of the conclusion of the High Court that
the situs of the said debt is Pakistan. He also urged
alternatively that even if the situs of the judgmentdebt is assumed to be Pakistan, under the relevant
3~
268
SCPRE1TE COURT REPORTS
[1961]
'96°
provisions of Pakistan la.w the property in the judgment-debt did not. l'f)BI· in the Custodian a.nd continued
Thr A ,«Jf;n.'td to be the jJropert.v of appeila.nt 2.
~a.tura.lly 1.·n his
11olrl( of fiulia,
I.Id. 6 .1,,,11,,, opening Mr. Pritt assumed tha.t the view taken by the
v.
Pnnja.h High Court as tn the applicability of ss. 4(1)
11. 8 . .f"dhn .1r..1 and 4(3) of the Order was right and when the correctK"11'"1'"
ness of the said finding was challenged by the responG .
, --,, 1 dent in his reply Mr. Pritt supported the said finding
a;en11ra .i:ru ,,-ar
h
.
on t e merits.
On the other hand, the learned Solicitor-General has
seriously disputed the correctness of the High Court.'s
conclusion about the applicability of ss. 4(1) and 4(3)
of the Order to the decree in question w bile ho ha.a
su pportcd tho othor findings of the High Court against
thP appellants. On these contentions the question
which logice.IJy must first he considered is whether the
decree under
ex:e~ution attracts the pro1·isions of
s. 4(3) of the Order.
The Order was me.do by the Governor-Genera.I on
August 12, 194 7, in exercise of the powers conferred on
him by s. 9 of the Indian Independence Act, 1947, and
all other powers enabling him in that behalf. Section
1(2) of the Order provides that it sha.11 come into force
a.t once. Section 2 of the Order provides that the
appointed day means the 15th of August, 1947.
Section 3 makes provisions for proceedings pending
immediately before thf3 appointed day in any of the
special tribunals specified in column I to the Schedule.
We are not concerned with the provisions of this section in the present appeal. We are concerned with
s. 4 which it is necessarv t-0 read.
Section 4 reads thus:-
" 4. i\otwithstanding the creation of certain new
Provinces and the transfer of certain territories from
the Province of Assam to the Province of Ea.st Bengal
by the Indian Independence Act, 1947,-
(1) All proceedings pending immediately before
the appointed day in any civil or criminal court (other
than a High Court) in the Province of Bengal, the
Punjab or Asa&m shall be continued in tba.t court a.s
if the said Act had not been passed, a.nd that court
shall continue to ha. ve for the purposes of the said
1 S.C.R. SUPREME COURT REPORTS
269
proceedings all the jurisdication and powers which it
r96o
had immediately before th~ appointed da~;
.
The Assodoted
(2) any appeal or applwat1on for revlS!on Ill resHotels of India,
pect of any proceedings so pending in any such court Ltd. & Another
shall lie in the court which would have appellate, or as
v.
the case may be revisional, jurisdiction over that court R. B. Jodh~ Mal
if the proceedings were institute~ in that court after
Knthalia
the appointed day ; and
Gajendragadka · j
(3) effect shall be given within the territories of
' ·
either of the two Dominions to any judgment, decree,
order or sentence of any such court in the said proceedings, as if it had been passed by a court of competent jurisdiction within that Dominion."
The question which we have to consider is whether
the proceedings from which the appeal to the Federal
Court arose fall within s. 4(1); if they do s. 4(3) will
come into operation. If, however, the said proceedings
do not fall within s. 4(1), s. 4(3) would be inapplicable.
The appellants contend that the words used ins. 4(1)
are wide enough to include every suit pending in any
civil court in the Punjab at the material time, and
there is no scope for limiting the extent of the applicability of the said clause. On the other hand, it is
urged for the respondent the.t it is only such proceedings as were pending in any court at the material time
jurisdiction in respect of which would have been
affected by the transfer of certain territories from one
country to the other that are intended to be covered
under s. 4(1). The problem thus posed by the parties is
one of construction. As we have already observed, the
High Court has construed s. 4(1) in favour of the
appellants; and we have to consider whether the High
Court was right in reaching the said conclusion.
Both the parties are agreed that in construing the
provisions of s. 4(1) of the Order we should bear in
mind the object with which the Order was made and
should construe the provisions of the Order after reading them as a whole. Since the Order has been passed
in exercise of the powers conferred on the Governor.
General by s. 9 of the Indian Independence Act it
would be useful to refer to the material provisions of
the said section._ Section 9(l)(d) provides that the
270
SUPREME COCRT REPORTS
[1961]
1960
Governor-Genora.l she.II by order ma.ke such provision
n
4 •
. 1 d as appears to him necessa.ry or expedient for removing
Hot:,; 07'/:d'.a. difficulties a.rising in connection with the tra.nsition to
Ltd."' A""''" the provisions of this Act. It we.a rea.lisod tha.t a.a a.
v.
result of the Act, in ca.rving out two Dominions cerR. R. Jodha .lfal taiu area.a ma.y ha.ve to be transferred from a. ProI<uthaloa
vince in one Dominion to a. province in another DomiGaje•dragadkar ;. nion a.nd such a. transfer would inevitably create
difficulties of jurisdiction of the civil courts to continue
to try proceedings a.lrea.dy pending before them. The
Order was, therefore, ma.de with the object of a.voiding
unneoessa.ry complica.tions or ha.rdship to the litiga.nts, a.nd so it provided tha.t tho proceedings covered by it which were ponding a.t tho ma.teria.l time
should be continued a.a if the Act ha.d not been pa.seed.
In other words, a. depa.rture wa.s delibera.tely ma.de
from the norms.I rules of private interna.tional la.w in
regard to the enforceability of foreign judgments. Both
parties are agreed that this was the object in ma.king
the Order, a.nd tha.t in construing the releva.nt words
of the Order the courts must bear this object in mind.
It is then urged by the lea.med Solicitor-Genera.I
that in its very nature tho Order 8hould be treated a.s
temporary though he immediately a.dded tha.t it would
be a.live a.nd in operation until a.II the proceedings
covered by it ha.ve been finally and fully disposed of.
No doubt he commented on the fa.ct that the Pakistan
Government ha.d by its legislative process ma.de a.
substantial departure from the provisions of the Order,
and had in su beta.nee decided to refuse to recognise
judgments a.nd orders of Indian courts to which the
provisions of the Order undoubtedly applied. In this
connection our a.ttontion wa.s drawn to the Indian
Independence (Pakistan Courts Pending Proceedings)
Act, 1952 (IX of 1952), which bys. 3 provides tha.t
notwithstanding anything contained in a.ny of the
orders referred to in s. 2, no decree to which this Act
applies shall be gi\"en effect to by any court or authority in India. so far a.s such decree imposes a.ny liability
or obligation on a.ny government in India. It appears
tha.t the Indian Government wa.s satisfied that Pakistan had thought it fit to provide that no decree or
,.
1 S.C.R. SUPREME COURT REPORTS
271
order passed by e. court in India would be given effect
z960
to in Pakiste.n, and so it became necessary the.t the
G
·
The A ~sociated
Position of the overnment India and the three State Hotels of India,
Governments concerned should be e.deque.tely safeguLtd. ,,_ Another
arded. It is with the.t object the.t this Act was passv.
ed. The Solicitor.General contends that though the R. B. Jodha Mal
Order had been made by the Governor-General under
Kuthalia
s. 9 of the Indian Independence Act and was intend- G . d-dk 1
ed to apply to both tho Dominions virtually t.he pro01'" raga
0
'
•
visions of the Order are no longer in operation in
Pakistan. In our opinion, this consideration is hardly
relevant in construing the material provisions of the
Order. So long as the Order remains in force and has
neither been modified or repealed it is the duty of the
courts in India to consider its provisions in a fair and
reasonable manner and to give full effect to them.
Considerations based .on the unilateral conduct adopted by the Pakistan Legislature in departing from the
provisions of the Order cannot, .in our opinion, ha.ve
any bearing when we are dealing with the question of
the construction of the Order itself. The Order is in
force, and if the decree sought to be executed by the
appellants falls under s. 4(1) it will attract the provisions of s. 4(3) and all relevant questions arising in
working out the provisions of s. 4(3) would have to be
judicially considered. It may be that there may not
be a large number of decrees_ or orders which stiil
remain executable and have not been executed and so
occasions to invoke the provisons of this Order may
not be tqo many ; but that is another matt.er.
Let us then consider the provisions of s. 4(1) first.
Mr. Pritt has urged that the appeal to the Federal
Court in which the decree under execution ~as passed
in favour of appellant 2 arose from proceedings which
were pending at the material time in a court in the
Punjab and as such it fell. within the purview of
s. 4(1).
He emphasises the fact that s. 4(1) refers to
all proceedings in any civil court in the Punjab as
well as in the Provinces. of Bengal and Assam,. a.nd
his case is that there is no justification for limiting
the scope and effect of the-wide words used in the first
part of the clause. Prima faoie. there is some force in
272
SUPREME COURT REPORTS
[1961]
r9bo
this contention; but, in our opinion, it would be erro.
neous to construe those ·words in isolation and &pa.rt
Tht A s.1ocialrd
Hold.< of India, from the rest of the provisions in the said clause it.
1.1J. ,~ A,,,1her self. It is significant that s. 4 refers t-0 the creation of
v
cert a.in new Provinces and the transfer of certain terri.
R. B. J ""'" .1ta1 tori es from the Province of Assam to the Province of
r; .. ihatia
East Bengal by the Independence Act. In other words,
Ga;rnd~;;~dka. J. the non.obstante claus~ which c~nstitutes the pre.
amble of s. 4 clearly indicates that 1t was the creation
of certain new Provinces and the transfer of certain
territories which was the re<1.son for the provisions
made in the three clauses of the said section.
It is
also significant that s. 4 is confined to the specified
judicial proceedings pending in only three Provinoes;
that is to say, proceedings pending in competent
courts either in Sind or in the North West Frontier
Province which are parts of Pakistan and in all the
States in India except Punjab, West Bengal and
Assam do not attract the provisions of the Order.
There is, therefore, no doubt that the High Court
was in error in assuming that "the use of tho words
' all ' in ' all proceedings' clearly indicated that all
caRes pending in all courts in the two Dominions
were intended to be covered by the Order. It is
manifest that the Order, in its application to India
and Pakistan, covered only three Provinces and not
all.
The latter part of s. 4(1) must now be oonsidered.
The pending proceedings covered by the first part
have to bo continued in the court where they are
pending as if the said Act had not been passed, and
that court shall continue to have for the purpose of
the said proceedings all t.he jurisdiction and powers
which it had immediately before the appointed day.
These two cla.usns unambiguously indicate that by the
passing of the Act the initial jurisdiction of the court
to entertain the proceedings ponding before it wa.s
affocted; that is why, in authorising the said proceed.
ings to continue before the said court the clause proceeds to 8ay that the said proceedings shall continue
as if the Act ha.d not been passed.
In other words,
readings. 4(1) a~ a whole there can be no doubt that
•
1 S.C.R. SUPREME COURT REPORTS
273
its provisions were intended to safeguard the continur96o
ance of only such pending proceedings in respect of Th A
.
d
which questions of jurisdiction of the trial court Ho;,1, ~;';:~ia,
would have arisen by the passing of the Act and the Lid. & Another
transfer of certain territories. If proceedings were
v.
pending before the specified courts validly at the mate- R. B. Jodh~ Mal
rial time, and if the jurisdiction of the said courts to
Kuthalia
·
continue with the trial of the said proceedings was Gajendragadka; J.
not affected by the passing of the Act or the transfer
of the territory, it was wholly unnecessary to authorise the continuance of the said proceedings in the
said court and to provide that the said proceedings
should be so continued as if the Act had not been
passed. In regard to such proceedings the latter part
of s. 4(1) would be wholly redundant. The only
answer which Mr. Pritt attempted to give in facing
this difficulty was that even in regard . to proceedings
which the specified court was competent to try even
after the passing of the Act its jurisdiction to execute
the decree would be impaired or affected and that was
intended to be cured by s. 4(1). This argument is
clearly; far-fetched and untenable. The jurisdiction
and powers which are saved by s. 4(1) are in terms
described as jurisdiction and powers " for the purpose
of the said proceedings". It is the jurisdiction to continue with the pending proceedings which had been
validly initiated and the word " proceedings " in the
context must mean, in the case of a suit, a suit and
not proceedings which may be taken out to execute
the decree that may be passed in such a suit. Therefore, we feel no difficulty in holding that s. 4(1) does
not apply to all proceedings pending at the material
time before the specified courts but only such of them
in respect of which the jurisdiction of the trial court
would have been affected by the passing of the Aut or
by the transfer of certain territories.
·
Section 4(2) deals with appeals or revisional applications arising from the pending proceedings covered
by cl. (1). The learned Solicitor-General contends
that this clause cannot apply to an appeal before the
Federal Court because, according .to him, it is only
an appeal in respect of a pending proceeding that is
274
SUPREME CO"CRT REPORTS
(1961]
1960
contempla.ted by the els.use.
He a.rgues tha.t the word
"a.ppea.I" ca.n rea.sona.bly mea.n only one a.ppeal which
T'lle Associated
Hoiels of India, a.rises directly a.ga.in8t the decree passed in the pendUd . .s. Anoth" ing proceedings a.nd there would, therefore, be no
v.
scope to extend the application of s. 4(2) to a second
R. B. Jodha Mal a.ppea.l, a.a for instance a.n appeal to the Federal Court
Kutha/oa
in the present ca.se.
In support of this argument he
Gaj•ndragadkar 1. ha.a incidentally referred to the fact that th ti Federal Court ha.d not come into existence and bad no
jurisdiction to entertain a. regular appeal from a decision of the High Court at the time when the Order was
made. We are not impressed by this argument. In
our opinion there is no doubt tba.t the word "appea.l"
in the context must mean any appeal or appeals
a.llowed by law in respect of pending proceedings covered by cl. (1). Any other view would lead to unreasonable, if not anomalous, consequences. What cl. (2)
intends to provide is that the proceedings to which
cl. (1) applies should be allowed to take their fullcourse under the law governing them, and the final
effective appellate decision should be as valid in
regard to the said proceedings as it would be in regard
to the proceedings validly instituted in that court
after the appointed da.y. Incidenta.lly, we ma.y point
out tha.t 11.s a. result of the combined opera.tion of Order
G. G. 0. 3 ma.de on Februa.ry 25, 1948, and the provisiona of the l<'edera.l Court (Jurisdiction Enlargement)
Act, 1 of 1950, the Feelers.I Court must be deemed to
ha.ve come iut-0 existence and must be deemed to ha.ve
had powers to entertain appeals from the decrees of
the High Courts as from the appointed day.
That takes ns to s. 4(3).
The Solicitor-Genera.I contends that the expression" effect sLa.11 be given to"
in this cla.uso does not mean that the decree shall be
executed. It only means that the decree shall be
recognised as a decree passed by a court of competent
jurisdiction and nothing more.
His argument is that
s. 4 wanted to make a. very narrow a.ad limited departure from the ordinary principles of private interna.-
tional la.w. It is well-known that except for ca.BOB fa.11ing under ss. 44 and 44A of the Code of Civil Procedure a. foreign judgment has to be enforced by a. suit;
1 S.C.R. SUPREME COURT REPORTS
275
and in such a suit the judgment.debtor is entitled to
z96o
make certain pleas against the enforcement of the
' d
The A ssociatt.d
JU gment. These pleas are specified by els. (a) to (f) Hotels of India,
of s. 13 of the Code.
According to the Solicitor-GeneLtd. & Another
ral, as a result of the fiction introduced by s. 4(3),
v.
when a foreign judgment to which s. 4(1) applies is R. B. Jodha Mal
sought ,to be enforced by a suit in an Indian court it
Kuthali•
would not be open to the judgment-debtor to urge
-
that the judgment or decree has not been passed by a Gajendragadkar f.
court of competent jurisdiction ; though such a plea is
permissible under s. 13(a) it is excluded by operation
of s. 4(3) of the Order; the remaining pleas would still
be a va.ilable to the judgment-debtor. If it is held
that the word "effect shall be given" means that the
decree shall be executed quite clearly all the pleas
recognised by s. 13 of the Code would be inapplicable.
Therefore, according to the respondent, the present
decree cann.ot be executed but must be enforced by a
suit and it would be open to the judgment-debtor to
raise pleas (b) to (f) recognised by s. 13 of the Code.
This argument is sought to be supported on the
ground that the jurisdiction which is protected by
s.