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CASE NO.: Appeal (civil)  1855-1856 of 2004

PETITIONER: Shipping Corporation of India Ltd.

RESPONDENT: Machado Brothers & Ors.

DATE OF JUDGMENT: 25/03/2004

BENCH: N.Santosh Hegde & B.P.Singh.

JUDGMENT: J U D G M E N T

(Arising out of SLP)Nos.10033-10034 of 2003)

SANTOSH HEGDE,J.

       Heard learned counsel for the parties.

       Leave granted.

These two civil appeals arise out of a common order made  by the High Court of Madras at Chennai in Civil Revision Petition  (P.D.) No.309 of 2003 and CMP No.2222 of 2003. By the above  order, the High Court upheld an order made by the City Civil  Court at Chennai in I.A.No.20651 of 2001 in O.S.No.4212 of  1995. The said I.A. filed under Section 151 C.P.C. by the appellant  herein was for the dismissal of the suit O.S.No.4212/95 which was   filed by the respondent herein on the ground that the said suit had  become infructuous. The facts necessary for the disposal of these appeals are as  follows: The appellant herein had appointed the respondent as the  Steamship Agent of the appellant for the purpose of handling  tankers, bulk carriers, and tramp vessels, calling at the port of  Tuticorin. It is the contention of the appellant that the said  agreement provides for termination of the contract. On being  dissatisfied with the conduct of the respondent, invoking the said  clause of termination and for the reasons mentioned therein, by a  notice dated 23.2.1995, the appellant terminated the said contract  of agency. The respondent herein challenged the said termination  by way of a suit in O.S.No.4212/95 in the City Civil Court at  Madras (the trial court). In the said suit the respondent inter alia  prayed for the following reliefs: "The plaintiff, therefore, prays for a  judgment and decree against the defendants 1 to 3  for a declaration to declare that the order of the  termination issued by the 1st defendants on  23.2.1995 through telex terminating the Plaintiff’s  agency, as per the agreement dated 3.6.1988, is  illegal, void and unenforceable."

During the pendency of the said suit, the respondent also  prayed for an interim injunction restraining the appellant from  interfering with the agency of the respondent. The trial court by an  order dated 24.11.1995 was pleased to grant interim relief sought  for by the respondent which became final consequent upon the  appellant’s challenge to the same made before the High Court  being rejected.  During such continuation of the agency, the appellant

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allegedly noticed certain financial irregularities and was  contemplating to take fresh steps to terminate the agency once  again. Anticipating such subsequent termination, the respondent  herein filed another suit O.S.No.4849/2001 before the trial court  praying for production of accounts of the appellant and  appointment of an Advocate Commissioner to scrutinize the  accounts of the parties.  During the pendency of the above noted two suits filed by  the respondent, the appellant by a notice dated 23.8.2001 again  terminated the agency of the respondent on the ground of  respondent charging excess amount and on the charge of tampering  with invoices and bills. The said notice stated that the appellant  was terminating the agency under Clause 31 of the Agency  Agreement and on expiry of 90 days from the date of the receipt of  the said notice the agency will stand terminated.  On receipt of the above notice, the respondent filed another  suit for permanent injunction in O.S.No.5100/2001. In the said  suit, respondent sought for an interlocutory injunction but the trial  court in the said application granted an order of status quo. The  appellant attempted to get the said order of status quo vacated and  having failed, it challenged the same in a revision petition before  the High Court along with a prayer for dismissal of all the three  suits pending before the trial court. The said revision petition came  up for orders before the High Court on 7.12.2001 and the same was  remanded with the direction that I.A.No. 14780 of 2001 should be  heard with I.A.No.15301 of 2001. Thus when the matter stood  remanded to the trial court, the appellant filed I.A. No.20651 of  2001 in O.S.No.4212/95 (the first suit) inter alia praying for the  dismissal of that suit on the ground the same had become  infructuous because of the subsequent and fresh notice of  termination which was the subject matter of the third suit, namely,  O.S.No.5100/2001.  The said I.A.No.20651/2001 for dismissal of  O.S.No.4212/95 came to be rejected by the trial court on the  ground that the same lacks in bona fide and allowing the  application would cause prejudice to the respondent with regard to  the continuation of the agency. The trial court also held since the  injunction granted in the first suit had became final, same cannot  be either defeated or vacated by seeking the dismissal of the suit. The said order of the trial court came to be once again  challenged before the High Court in the above noted revision  petition and the miscellaneous petitions. The High Court agreeing  with the conclusions of the trial court also came to the conclusion  that the dismissal of O.S. No.4212/95 on the ground that the same  had become infructuous would result in vacating the order of  interim injunction earlier granted in the said suit. The High Court  also agreed with the trial court that such dismissal on the ground of  suit having become infructuous would prejudice the respondent,  hence, dismissed the petition.  It is against the said order of the High Court confirming the  order of the trial court, the appellants are before us in these  appeals. Shri C.A.Sundram, learned senior counsel appearing for the  appellant contended that the courts below failed to notice that a  suit for declaration for the continuance of an agency which is in the  nature of a personal service is barred under Section 14 of the  Specific Relief Act. He also contended a suit for mere declaration  is also barred under section 34 of the Specific Relief Act. He  further contended at the most the respondent-plaintiff could have  sought for damages in the event of it establishing wrongful  termination and would not be entitled to a decree for specific  performance to continue the agency. He also submitted since under  the terms of the agency agreement itself a termination of the  agreement is contemplated, the trial court could not have  entertained a suit for declaration that such termination is bad and

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further in aid of such a relief grant a mandatory order of injunction  directing the continuation of agency during the pendency of the  suit. He submitted the reasons given by the two courts below that  dismissal of the suit would in effect amount to dissolving of the  injunction granted as an interim measure is per se illegal because  no suit could be continued only for the purpose of continuing an  interim order. He also challenged the finding of the two courts  below that the application filed by the appellant for dismissal of  the suit is not a bona fide application.  The learned counsel relied on Order 7 Rule 11, Order 12  Rule 6, Order 15 Rules 1 and 3 and Order 23 Rule 1 of CPC to  point out that apart from Section 151 of CPC even under those  provisions of the Code there is a duty cast on the trial court to put  an end to a litigation if the same had become infructuous. In the  instant case, the learned counsel pointed out that there was only  one agency agreement and in exercise of the right conferred by the   termination clause in the said agreement the appellant had  terminated the contract of agency of the respondent as far back as  on 23.2.1995, but by virtue of the interim order granted by the  courts below the appellant had to continue the same much against  the interest of the appellant. Be that as it may, the learned counsel  submits that a fresh cause of action had arisen which required the  said agency agreement again to be terminated. Hence a notice of  termination dated 23.8.2001 was issued nearly six years after the  first letter of termination which in fact and in law substituted the  first letter of termination. Consequent to which the first letter of  termination became non existent and consequently the suit filed on  that basis became infructuous because the cause of action, if any,   which gave rise to the first suit disappeared. Hence, the courts  below ought to have accepted the application of the appellant for  the dismissal of the suit. The learned counsel also contended both  the courts below have not given any finding as to the effect of the  second termination notice vis-a-vis the existence of cause of action  to continue the first suit and proceeded erroneously on the ground  that dismissal of said suit would make the injunction ineffective, as  if the interim order in a proceeding can survive after the disposal of  the main matter or that the main matter can be kept pending to  continue the interim order. Shri P.R.Kovilan learned counsel appearing  for the  respondent supported the orders of the courts below and contended  that the same are just and equitable. Learned counsel also  submitted that a revision against the dismissal of an application  under section 151 was not maintainable before the High Court  because the same was an appealable order. He also supported the  orders of the two courts below that the application filed for  dismissal of the suit lacked bona fides and the appellant having  failed to get the injunction in the said suit vacated has resorted to  this mode of getting the injunction vacated. He submitted if the  plaint showed the existence of a cause of action on the date of  filing of the same, subsequent disappearance of cause of action  would not make the suit bad or infructuous. He also contended  allowing of the application of the appellant and dismissing the first  suit as having become infructuous would cause great prejudice to  the respondent. From the argument of the learned counsel for the appellant,  we notice his challenge to the impugned orders of the courts below  is based on the following grounds : (a)     A suit challenging a notice of termination of an agency  which is in the nature of a personal contract is not  maintainable. (b)     A suit simplicitor for declaration without seeking any  consequential relief is also not maintainable. (c)     Suit O.S.No.4212/95 having become infructuous with  the eclipse of cause of action mentioned in the said plaint  the court ought to have dismissed or disposed of the said

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suit as contemplated under the various provisions of the  Civil Procedure Code like Order 7 Rule 11, Order 12  Rule 6, Order 15 Rules 1 and 2 and Order 23 Rule 1. (d)     At any rate when the appellant brought to the notice of  the court by way of an application under Section 151 of  CPC that the original notice which is the foundation of  the suit O.S.No.4212/95 having been superceded by a  subsequent termination notice in regard to the very same  contract of agency, the courts below ought to have in the  interest of justice allowed the same and dismissed the  suit as having become infructuous, keeping open the  rights of the parties to be adjudicated in the other two  suits pending before it. From the argument of the learned counsel for the  respondent, we notice the same is based on the following grounds: (a)     A revision against the dismissal of the application filed  under section 151 before the High Court was not  maintainable. (b)     The application for dismissal lacked bona fides. (c)     The respondent will be put to great hardship and  prejudice if the said IA were to be allowed and its first  suit is dismissed on the ground of having become  infructuous because the protection of the interim order  granted to it would be lost. Having carefully considered the arguments of the parties and  perused the records, we notice that the first three arguments  addressed by the appellant though seems to indicate some legal  backing still will not be entertained by us because that was not the  basis on which application I.A.20651/2001 was filed by the  appellant before the trial court. The only ground on which the said  application was filed is that, in view of the subsequent termination  notice the first termination notice disappeared consequently the  cause of action also disappeared. This application did not question  the maintainability of the suit on the grounds which are urged now  before us nor the various provisions of CPC now urged before us  ever urged in the said application, and that does not also seem to be  the argument of the appellant before the courts below as could be  seen from the contents of the two impugned orders. We do not  think we should permit the appellant to raise these grounds for  which sufficient foundation has not been laid in the pleadings and  arguments before the courts below. At the same time, we are  unable to accept the argument of the learned counsel for the  respondent who contended that the revision petition filed by the  appellant before the High Court was not maintainable because of  the availability of a remedy by way of an appeal. We have  carefully examined the various provisions of the CPC which  provides or contemplates filing of an appeal but we find no such  provision available to the appellant to file an appeal against the  order made by the trial court on an application filed under Section  151 CPC. Nor has the learned counsel appearing for the respondent  been able to point out any such provision therefore, the said  argument has to be rejected.  This leaves us to consider the merits of the application filed  by the appellant for dismissing the first suit O.S.No.4212/95 which  is on the ground of the same having become infructuous. Before  proceeding further to consider this question, we must notice the  fact that the respondent has not disputed the fact that there is only  one agreement of agency dated 3.6.1988 and that the said agency  came to be first terminated by a notice from the appellant dated  23rd February, 1995 which was the basis of the suit  O.S.No.4212/95 and the very same agency came to be terminated  once again by another notice dated 23.8.2001. It is also not  disputed nor is it the basis of the orders of the two courts below  that by the issuance of the second notice, the earlier termination  notice dated 23.2.1995 stood superseded. If that be so, the question

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for our consideration is : whether the said suit O.S. No.4212/95 is  liable to be dismissed as having become infructuous or, as has been  held by the two courts below, whether the said suit should be kept  pending to keep alive the interlocutory order made in the said suit.  The further question to be considered is: can an application to  dismiss the suit on the ground of same having become infructuous,  be dismissed on the ground that the said application lacks bona  fide or that the same would cause prejudice to the plaintiff because  of the consequences of dismissal of that suit. Coming to the maintainability of I.A.No.20651/2001, the  learned counsel for the appellant in support of his contention that  an application under Section 151 CPC for the dismissal of the suit  on the ground of same having become infructuous was  maintainable, has relied on number of judgments. In M/s. Ram  Chand & Sons Sugar Mills Pvt.Ltd. Barabanki (U.P.) vs.  Kanhayalal Bhargava & Ors. (AIR 1966 SC 1899) while  discussing the scope of Section 151 CPC this court after  considering various previous judgments on the point held: "The inherent power of a court is in  addition to and complementary to the  powers expressly conferred under the Code.  But that power will not be exercise if its  exercise is inconsistent with, or comes into  conflict with, any of the powers expressly or  by necessary implication conferred by the  other provisions of the Code. If there are  express provisions exhaustively covering a  particular topic, they give rise to a necessary  implication that no power shall be exercised  in respect of the said topic otherwise than in  the manner prescribed by the said  provisions. Whatever limitations are  imposed by construction on the provisions  of S.151 of the Code, they do not control the  undoubted power of the Court conferred  under Section 151 of the Code to make a  suitable order to prevent the abuse of the  process of the court."                  From the above, it is clear that if there is no specific  provision which prohibits the grant of relief sought in an  application filed under Section 151 of the Code, the courts have all  the necessary powers under Section 151 CPC to make a suitable  order to prevent the abuse of the process of court. Therefore, the  court exercising the power under section 151 CPC first has to  consider whether exercise of such power is expressly prohibited by  any other provisions of the Code and if there is no such prohibition  then the Court will consider whether such power should be  exercised or not on the basis of facts mentioned in the application. In the instant case, the appellant contends that during the  pendency of the first suit, certain subsequent events have taken  place which has made the first suit infructuous and in law the said  suit cannot be kept pending and continued solely for the purpose of  continuing an interim order made in the said suit. While examining this question we will have to consider  whether the court can take cognizance of a subsequent event to  decide whether the pending suit should be disposed of or kept  alive. If so, can a defendant make an application under Section 151  CPC for dismissing the pending suit on the ground the said suit has  lost its cause of action. This Court in the case of Pasupuleti  Venkateswarlu vs. The Motor & General Traders (1975 1 SCC 770  at para 4) has held thus: "We feel the submissions devoid of  substance. First about the jurisdiction and  propriety vis-‘-vis circumstances which

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come into being subsequent to the  commencement of the proceedings. It is basic  to our processual jurisprudence that the right  to relief must be judged to exist as on the  date a suitor institutes the legal proceeding.  Equally clear is the principle that procedure  is the handmaid and not the mistress of the  judicial process. If a fact, arising after the lis  has come to court and has a fundamental  impact on the right to relief or the manner of  moulding it, is brought diligently to the  notice of the tribunal, it cannot blink at it or  be blind to events which stultify or render  inept the decretal remedy. Equality justifies  bending the rules of procedure, where no  specific provision or fairplay is not violated,  with a view to promote substantial justice \026  subject, of course, to the absence of other  disentitling factors or just circumstances. Nor  can we contemplate any limitation on this  power to take note of updated facts to  confine it to the trial court. If the litigation  pends, the power exists, absent other special  circumstances repelling resort to that course  in law or justice. Rulings on this point are  legion, even as situations for applications of  this equitable rule are myriad.  

We affirm the proposition that for  making the right or remedy claimed by the  party just and meaningful as also legally and  factually in accord with the current realities,  the court can, and in many cases must, take  cautious cognizance of events and  developments subsequent to the institution of  the proceeding provided the rules of fairness  to both sides are scrupulously obeyed."                           In the very same case, this Court quoted with approval a  judgment of the Supreme Court of United States in Patterson vs.  State of Alabama, (294 US 600) wherein it was laid down thus :         "We have frequently held that in the  exercise of our appellate jurisdiction we  have power not only to correct error in the  judgment under review but to make such  deposition of the case as justice requires.  And in determining what justice does  require, the Court is bound to consider any  change, either in fact or in law, which has  supervened since the judgment was  entered."

Almost similar is the view taken by this Court in the case of  J.M.Biswas vs. N.K.Bhattacharjee & Ors. (2002 (4) SCC 68)  wherein this Court held : "The dispute raised in the case has  lost its relevance due to passage of time and  subsequent events which have taken place  during the pendency of the litigation. In the  circumstances, continuing this litigation will  be like flogging a dead horse. Such  litigation, irrespective of the result, will  neither benefit the parties in the litigation  nor will serve the interests of the Union."

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Thus it is clear that by the subsequent event if the original  proceeding has become infructuous, ex debito justitiae, it will be  the duty of the court to take such action as is necessary in the  interest of justice which includes disposing of infructuous  litigation. For the said purpose it will be open to the parties  concerned to make an application under Section 151 of CPC to  bring to the notice of the court the facts and circumstances which  have made the pending litigation infructuous. Of course, when  such an application is made, the court will enquire into the alleged  facts and circumstances to find out whether the pending litigation  has in fact become infructuous or not. Having thus understood the law, we will now consider  whether the courts were justified in rejecting the application filed  by the appellant herein for dismissing the suit on the ground that  the same had become infructuous. In this process, we have already  noticed that there seems to be no dispute that the original  termination notice based on which first suit O.S.No.4212/95 was  filed, has since ceased to exist because of the subsequent  termination notice issued on 23.8.2001, validity of which has  already been challenged by the respondent in the third suit. While dismissing the application I.A.No.20651/2001 the  courts below proceeded not on the basis that the original notice of  termination has not become infructuous, but on the basis that the  said application lacks in bona fide and if the said application is  allowed the interlocutory injunction hitherto enjoyed by the  plaintiff will get vacated and consequently the plaintiff will be  prejudiced. The question for our consideration now is whether such  ground can be considered as valid and legal. While so considering  the said question one basic principle that should be borne in mind  is that interlocutory orders are made in aid of final orders and not  vice versa. No interlocutory order will survive after the original  proceeding comes to an end. This is a well established principle in  law as could be seen from the judgment of this Court in Kavita  Trehan (Mrs.) & Anr. vs. Balsara Hygiene Products Ltd. (1994 5  SCC 380) wherein it is held : "Upon dismissal of the suit, the  interlocutory order stood set aside and that  whatever was done to upset the status quo,  was required to be undone to the extent  possible."  

       Therefore, in our opinion, the courts below erred in  continuing an infructuous suit just to keep the interlocutory order  alive which in a manner of speaking amounts to putting the cart  before the dead horse.         The next ground given by the courts below that the dismissal  of the suit would prejudice the respondent, again on the ground of  interlocutory order getting dissolved, cannot also be sustained. If  the suit in fact has become infructuous consequences of dismissal  of such suit cannot cause any prejudice to the plaintiff. As a matter  of fact, the consequence should be to the contrary, that is, such  continuance of infructuous suit would cause prejudice to the  defendant. We have already noticed that the courts below have also  held that the application of the appellant lacks in bona fide. We fail  to understand how this is so. If a party has a legal right to ask for  dismissal of an infructuous suit, and pursuant to the said right it  makes an application for dismissal of said suit, the same cannot be  termed as an act in malice. For the reasons stated above, we are of the opinion that  continuation of a suit which has become infructuous by  disappearance of the cause of action would amount to an abuse of  the process of the court and interest of justice requires such suit  should be disposed of as having become infructuous. The  application under Section 151 of CPC in this regard is

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maintainable. For the reasons stated above, this appeal succeeds.  I.A.No.20651 of 2001 filed by the appellant in O.S.No.4212/95 is  allowed. Consequentially suit O.S.No.4212/95 pending in the court  of City Civil Court at Chennai is dismissed as having become  infructuous. The appellant shall be entitled to cost throughout.