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PETITIONER: R.S.D.V. FINANCE CO.  PVT.  LTD.

       Vs.

RESPONDENT: VALLABH GLASS WORKS LTD.

DATE OF JUDGMENT03/02/1993

BENCH: KASLIWAL, N.M. (J) BENCH: KASLIWAL, N.M. (J) KULDIP SINGH (J) JEEVAN REDDY, B.P. (J)

CITATION:  1993 AIR 2094            1993 SCR  (1) 455  1993 SCC  (2) 130        1993 SCALE  (1)262

ACT: Code of Civil Procedure, 1908. Section     20-Junsdiction-Deposit    Receipt     containing endorsement  subject to jurisdiction of a particular  place- Whether excludes jurisdiction of all other Courts  otherwise competent to entertain the suit. Section 21(1)Objection to jurisdiction-Plea before Appellate or  Revisional Court-Conditions-Whether all  the  conditions are to be fulilled Bombay Relief Undertaking (Special Provisions) Act, 1958: Sections  3 and 4(1)(a)(iv)-Notification  declaring  relief- Undertaking-Extending  beyond the State immunity  to  Relief Undertaking   from  legal  liability-Competence   of   State Legislature.

HEADNOTE: The  appellant  deposited with the Respondent a sum  of  Rs. 10,00,000 for a period of 90 days on interest @ 19% p.a. The date  of  maturity  of the said  deposit  was  3.10.83.  The deposit  receipt contained an endorsement ’Subject to  Anand jurisdiction."  The Respondent failed to pay the  amount  on maturity  and requested the appellant to continue  the  said deposit till the end of November 1983 and handed over 5 post dated cheques for Rs. 2,00,000 each.  A cheque for  interest was  also given.  All these cheques were drawn on  a  Bombay Bank.  Since these cheques bounced back the appellant  filed before the High Court a summary suit against the  Respondent for recovery of the amount with interest. The   Respondent  contested  the  suit  on  the  ground   of jurisdiction.   It  also contested the  claim  for  interest after  maturity  on  the  ground  that  interest  ceased  on maturity.  The Single Judge who heard the matter decreed the suit  in favour of the appellant for a sum of Rs.  10,00,000 with interest. 456 The  Respondent preferred an appeal and the  Division  Bench allowed the    same and dismissed the suit. Aggrieved  by  the  judgment  of  the  Division  Beach,  the appellant has preferred the present appeal. Allowing the appeal, this Court, HELD  :  1.1.  Admittedly,  leave to  defend  the  suit  was

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obtained by the dependent from the Bombay High Court  itself Therefore, the Division Bench of the High Court was wrong in holding  that the suit was not based on the five post  dated cheques  and that the High Court had no jurisdiction to  try the  suit  as the deposit receipt contained  an  endorsement ’Subject  to Anand jurisdiction’.  The suit ’was  based  not only on the deposit receipt of Rs. 10,00,000 but also on the five  post  dated cheques.  When the plaintiff  had  made  a request  for allowing him to amend the plaint  such  request was  wrongly refused by the Bench.  The Division  Bench  was totally  wrong in passing an order of dismissal of the  suit itself  when It had arrived at the conclusion that the  High Court had no jurisdiction to try the suit.  The only  course to be adopted in such circumstances was to return the plaint for presentation to the proper Court and not to dismiss  the suit. [462D-F] 1.2. Sub-section  (1)  of Section 21 of the  Code  of  Civil Procedure  provides  that no objection as to  the  place  of suing shall be allowed by any appellate or revisional  court unless  such  objection  was taken in  the  Court  of  first instance   at  the  earliest  possible  opportunity.    This provision  clearly lays down that such objection as  to  the place  of  suing  shall  be  allowed  by  the  appellate  or revisional  court  subject  to  the  conditions  that   such objection  was taken in the Court of first Instance  at  the earliest  possible  opportunity-, that in  all  cases  where issues  are  settled then at or before  such  settlement  of issues;  and  that there has been a consequent   failure  of justice. [462G-H] 2.   In the instant case the condition of failure of justice is not fulfilled.  There was no dispute regarding the merits of the claim.  The defendant has admitted the deposit of Rs. 10,00,000  by the plaintiff, as well as the issuing  of  the five  cheques.   There  Is  no failure  of  justice  to  the defendant in decreeing the suit by the Single Judge.  On the contrary  It would be totally unjust and failure of  justice to  the  plaintiff  in  case  such  objection  relating   to jurisdiction is to be maintained as allowed by the 457 Division   Bench  of  the  High  Court  in   its   appellate jurisdiction. [463 C-D] A.B.C.  Laminart Pvt.  Ltd. & Anr. v. A.P. Agencies,  Salem, [1989] 2 SCR page 1, relied on. 3.   It  cannot  be disputed that the cause  of  action  had arisen  at Bombay as the amount of Rs. 10,00,000 Itself  was paid  through a cheque at Bombay and the same was  deposited in  the bank account of the defendent in Bombay.   The  five postdated  cheques were also issued by the  defendent  being payable  to  the  plaintiff at  Bombay.   The  endorsement ’Subject  to Anand jurisdiction’ has been made  unilaterally by  the defendent while issuing the deposit  receipt.   This endorsement  does  not contain the ouster clause  using  the words like ’alone’, ’only’, ’exclusive’ and the like.   Thus the maxim expression units best exclusion alterius cannot be applied under the facts and circumstances of the case and it cannot  be  said  that merely because  the  deposit  receipt contained the endorsement ’Subject to Anand jurisdiction’ it excluded  the  jurisdiction  of all other  courts  who  were otherwise competent to entertain the suit [463D-H] 4.The  legislature of a State is competent to make laws  for the whole or any part of the State.  It has exclusive  power to  make laws with respect to any of the matters  enumerated In  List-II  of the Seventh Schedule  to  the  Constitution. Subject to any law-made by the Parliament, the State  Legis- lature  can  also  make a law with respect  to  any  of  the

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matters   enumerated   in  Ust-III.    The   Bombay   Relief Undertakings (Special Provisions) Act, 1958 is relatable  to entry  22  of List 111 and probably to entries 20  and  24. The  Code  of  Civil  Procedure,  which  provides  where   a particular suit has to be Instituted, Is relatable to  entry 13 of List-111.  It is a central enactment applicable to the entire country.  Both the enactments relate to and deal with different  subjects-matters.   There is no question  of  any inconsistency between them. [469G-H, 470A-B] State  of Bihar v. Charusila Dasi, [1959] Supp. 2  SCR  601; State  of Bihar v. Bhabapritananda Ojha, [1959] Supp. 2  SCR 624  and Inderjit C. Parekh & Ors. v. B.K Bhatt & Anr.,  AIR 1974 SC 1183, distinguished. Jaipur Udyog Ltd. v. Punjab University & Anr., I.L.R. (1981) 1 Punjab & Haryana 624, disapproved. Binod  Mills  Ltd.  v.  Suresh Chandra,  [1987]  3  SCC  99, referred to. 458 5.   The State Legislatures do not possess the power to make a  law having extra territorial operation.  The  Legislature may  well confer an immunity (no doubt, temporary) upon  the relief undertaking effective within the bounds of state, but it  cannot extend that immunity beyond its bounds.  A  State cannot  prevent the other State from levying  and  realising (by  proceeding,  if necessary, against the  properties  and assets of the undertaking situate outside the state) the tax due from the relief undertaking in respect of the sales  and purchases effected in that State.  Similarly, it cannot  say that  the properties of the relief undertaking  situated  in other  States shall not be liable to property tax.  Nor  can it say that those properties cannot be proceeded against for realisation  of amounts due from the relief  undertaking  to third parties in pursuance of decrees/orders made by  courts outside  the State.  Such proceedings may ultimately  affect the  relief  undertaking adversely; they may  also  tend  to defeat   the   objective   underlying  the   Act   and   the notification.   But  that  can’t be  helped.   That  is  the limitation  of  power.  Probably, for this  reason  has  the Parliament  enacted the Sick Companies (Special  Provisions) Act, 1985. [470D-G] 6.   The  Gujarat Legislature is not competent to  regulate, modify   or  extinguish  the  obligations  and   liabilities incurred  by a ’relief undertaking’ (declared as such  under Section  3  of  the  Bombay  Relief  ’Undertaking   (Special Provision)  Act, 1953) outside the State of Gujarat nor  can it suspend or stay the suit or other proceedings relating to such  obligations and liabilities.  Section  4(1)(a)(iv)  of the  Bombay Act is not effective to suspend  the  plaintiff- appellant’s  right to money nor can it operate to  stay  the proceedings in the present suit in the Bombay Court.  If and when  any  execution is levied within the State  of  Gujarat and/or  against the proper. ties of the  relief  undertaking situated   within  the  State  of  Gujarat,  they   can   be interdicted by the said notification read with Section  4(1) (a) (iv) of the Bombay Act. [471B-C]

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 380 of 1993. From  the  Judgment and Order dated 24.10.91 of  the  Bombay High Court in Appeal No. 982/88 in summary suit No. 566/86. Harish  N. Salve, Berarwale, K.J. John, Ms. Deepa Dixit  for M/s Swarup John & Co. for the Appellant. 459

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Raian Karanjawala, Ms. M. Karanjawala and Ms. P. Mullice for the Respondent. The Judgment of the Court was delivered by KASLIWAL, J. Special Leave granted. This  appeal is directed against the Judgment of the  Bombay High  Court  dated 24th October, 1991.  Brief facts  of  the case are that the appellant R.S.D.V. Finance Company Private Limited (hereinafter referred to as ’the plaintiff) filed  a summary suit against the respondent Sh.  Vallabh Glass Works Limited (hereinafter referred to as ’the defendent’) in  the ordinary original civil jurisdiction of the High Court.  The case of the plaintiff was that it had deposited a sum of Rs. 10,00,000 with interest to be charged @ 19% per annum,  with the  defendant.  The said deposit was to be for a period  of 90 days.  The aforesaid amount of Rs. 10,00,000 was given to the  defendant company through cheque No. 933251  dated  5th July,  1983 in the bank account of the defendant at  Bombay. The  defendant  issued a deposit receipt for  the  aforesaid amount  dated  11.7.1983.  The  aforesaid  deposit   receipt contained  an  endorsement to the effect ’Subject  to  Anand jurisdiction’.  The date of maturity of the aforesaid amount was  to expire on 3.10.1983. According to the plaintiff  the defendant  failed  to pay the amount of  Rs.  10,00,000  and requested  the plaintiff to continue the said  deposit  till the end of November, 1983 and for that purpose, handed  over to  the plaintiff 5 post dated cheques of Rs. 2,00,000  each drawn  on  a Bombay bank.  The defendant had also  issued  a cheque dated 30th November, 1993 for a sum of Rs.  22,288.32 by  way  of interest on the said amount  of  Rs.  10,00,000. This  cheque  was  also drawn in  favour  of  the  plaintiff payable in Bombay.  The plaintiff submitted the aforesaid  5 cheques  for  payment but the same were dishonored  for  the reason   "insufficient  funds".   The  plaintiff  in   these circumstances filed a summary suit against the defendant for Rs.  10,00,000  as principal and interest Ca 19%  per  annum with 90 days rests. The  defendant in the written statement submitted  that  the fixed deposit receipt contained the endorsement ’Subject  to Anand jurisdiction’ are as such the Bombay High Court had no jurisdiction  to  entertain the suit.   The  defendant  also denied  that  the plaintiff was entitled to  claim  interest with  90 days rest.  The defendant further averred that  the plaintiff  was  not entitled to claim any  interest  as  the deposit receipt provided that 460 interest  will  cease  on maturity.  On  the  basis  of  the aforesaid  pleadings of the parties Learned Single Judge  of the High Court framed the following issues. The  Learned  Single Judge negatived the contention  of  the plaintiff that it had never agreed to the condition of Anand jurisdiction  made  on  the deposit  receipt.   The  Learned Single  Judge,  however,  accepted  the  contention  of  the plaintiff  that  the suit was also based on  the  five  post cheques of Rs. 2,00,000 each and those cheques being payable in Bombay the Court at Bombay had jurisdiction to decide the case.  The Learned Judge also took note of the fact that the High  Court  at  Bombay had already  granted  leave  to  the plaintiff  under Clause XII of the Letters Patent.   It  was also held that if a party had more than one cause of  action and  the suit was based on more than one cause of action  it was  always open to that party to give up any one  cause  of action  or  rely only on one cause of action.  It  was  also held that the leave had been granted to the plaintiff on the basis  of the averments made in para 13 of the plaint  which clearly  mentioned  that  the deposit was  obtained  by  the

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defendant  from  the plaintiff at Bombay.  The  monies  were deposited  by the plaintiff with the defendant at Bombay  in the defendant’s account in the Bank of Baroda, Nariman Point Branch,  Bombay.  The cheques for repayment of  the  deposit were given by the defendant drawn on Bank of Baroda, Nariman Point Branch, Bombay.  The plaintiff had further stated that though  the entire cause of action had arisen in Bombay  the plaintiff  as an abundant caution was applying for  approval under  clause XII Letters Patent also since  the  registered office of the defendant was situated at Vallabh Vidya  Nagar 388121,  (within the State of Gujarat).  The Learned  Single Judge also noted that in the written statement there was  no reply to paragraph 13 of the plaint and Mr. Parekh,  Learned counsel  appearing for the defendant in his  usual  fairness stated  that  the statements made in para 13 of  the  plaint were  correct.  The Learned Single Judge further  held  that the plaintiff in the suit had put its claim not only on  the basis of the deposit receipt but had been cautious enough to also. base its claim on the 5 post dated cheques which  were admittedly  payable  in Bombay.  The  Learned  Single  Judge under  issue No.2 held that the claim for compound  interest cannot  be sustained and the said issue was answered in  the negative.   The Learned Single Judge under issue No. 3  held that as the plaintiff has now restricted the cause of action to the 5 post dated cheques, the claim for interest can only arise  from the dates on which those cheques become due  and payable.  The Learned 461 Single  Judge  as  such passed a decree  in  favour  of  the plaintiff  and  against  the  defendant  in  a  sum  of  Rs. 10,00,000 along with interest thereon @ 19% per annum, on  a sum  of Rs. 2,00,000 from 23rd November, 1983, on a  sum  of Rs.  2,00,000 from 24th November, 1983, on a further sum  of Rs.  2,00,000  from  25th November, 1983 and a  sum  of  Rs. 2,00,000 from 29th November, 1983 and on the last sum of Rs. 2,00,000 from 30th November, 1983. On an appeal filed by the defendant a Division Bench of  the High  Court by its order dated 24th October, 1991 held  that in  the circumstances of the ease, the leave  granted  under clause XII of the Letters Patent must be revoked and it must be held that this Court had no jurisdiction to entertain and try  the  suit.  A prayer made on behalf  of  the  plaintiff seeking to amend the plaint was also rejected.  The  Learned Division Bench allowed the appeal and dismissed the suit. Aggrieved  against  the aforesaid Judgment of  the  Division Bench  of the High Court, the plaintiff has come  in  appeal before  this Court.  It may be mentioned at the outset  that the  deposit of Rs. 10,00,000 with the defendant as well  as the issuing of 5 cheques of Rs. 2,00,000 each is admitted by the  defendant.  The defendant company had a  branch  office and  also  carried  on business in Bombay.  It  is  also  an admitted position that the leave to sue under Clause XII  of the  Letters Patent was given by the Bombay High Court.   It is also an admitted position that the plaintiff had made the total  deposit of Rs. 10,00,000 by way of cheque No.  933251 dated  5th  July, 1983 drawn on the Canara Bank,  Bombay  in favour of the defendant and the said amount was deposited in the  bank  account of the defendant in the Bank  of  Baroda, Nariman Point, Bombay.  It may also be noted that the  leave to defend the suit by the Learned Single Judge was given  on the  condition of making a deposit of Rs.  10,00,000  within four weeks from 11.1.1988. The defendant preferred an appeal against  the  aforesaid order of the  Learned  Single  Judge dated  11.1.1988. The statement of the Learned  counsel  for the  defendant  in  the  aforesaid  appeal  proceedings  was

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recorded to the effect that the only defence to the suit was to  be  on  the  point that the High  Court  of  Bombay  had nojurisdiction to entertain the suit and the defendant would not contest the plaintiff’s claim on any other issue  except the issue on the point of jurisdiction.  The Division  Bench in  its order dated 19.1.1988 observed that the suit was  to be  tried  as  a  commercial cause only  to  the  aspect  of jurisdiction. We  have  ’heard Learned counsel for the  parties  and  have perused the 462 record.  In our view the Learned Division Bench was wrong in holding that in the facts and circumstances of this case the Bombay High Court had no jurisdiction to entertain the suit. The  amount  of Rs. 10,00,000 itself was paid  by  a  cheque dated 5.7.1983 drawn on the Canara Bank and the said  amount was  deposited in the bank account of the defendant  at  the Bank  of  Baroda, Nariman Point, Bombay.  On  11.7.1983  the defendant  issued  a deposit receipt and the  said  deposit receipt  contained  an  endorsement  of  ’Subject  to  Anand Jurisdiction’.   The  date  of  maturity  was  mentioned  as 3.10.1983. It is also not in dispute that the amount of  Rs. 10,00,000  along with interest was not paid on the due  date and  the  defendant  wrote  a letter  to  the  plaintiff  on 19.10.1983 stating therein that in view of certain  problems they  were not in a position to repay the deposit amount  on the  due date and thereby requested the plaintiff  to  allow the defendant to keep the deposit till the end of  November, 1983  with interest at 19% per annum on the delayed  payment as  well.   The defendant also issued the  five  post  dated cheques  for  Rs.  2,00,000 each drawn on  Bank  of  Baroda, Nariman Point, Bombay dated 23rd, 24th, 25th, 29th and  30th November,  1983  respectively.   It  is  also  an   admitted position  that the leave to defend the suit was obtained  by the defendant from the Bombay High Court itself The  Learned Division  Bench in our opinion was clearly wrong in  holding that  the suit was not based on the five post dated  cheques and  that the Bombay High Court had no jurisdiction  to  try the  suit  as the deposit receipt contained  endorsement  of ’Subject to Anand jurisdiction’.  The entire reading of  the plaint clearly shows that the suit was based not only on the basis  of the deposit receipt of Rs. 10,00,000 but  also  on the basis of the five post dated cheques.  Even if there was any  doubt  in the mind of the Division Bench,  the  Learned counsel  for the plaintiff had made a request  for  allowing him to amend the plaint but such request was wrongly refused by  the  Learned  Division Bench.  The  Division  Bench  was totally  wrong  in  passing an order of  dismissal  of  suit itself when it had arrived to the conclusion that the Bombay Court had no jurisdiction to try the suit.  The only  course to be adopted in such circumstances was to return the plaint for presentation to the proper court and not to dismiss  the suit.  It may be further noted that the Learned Single Judge trying the suit had recorded a finding that the Bombay Court had  jurisdiction  to entertain and decide the  suit.   Sub- sec.(1)  of  Section  21  of the  Code  of  Civil  Procedure provides that no objection as to the place of suing shall be allowed  by  any appellate or revisional Court  unless  such objection  was taken in the Court of first instance  at  the earliest possible opportunity and in all cases where  issues are  settled at or before such settlement and  unless  there has been consequent failure of justice. 463 The above provision clearly lays down that such objection as to  the place of suing shall be allowed by the appellate  or

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revisional court subject to the following conditions :-               (i)   That  such  objection was taken  in  the               Court  of  first  instance  at  the   earliest               possible opportunity;               (ii)  in  all cases where issues  are  settled               then at or before such    settlement        of               issues;               (iii) there  has been a consequent failure  of               justice. In  the  present case though the first  two  conditions  are satisfied  but the third condition of failure of justice  is not  fulfilled.   As already mentioned above  there  was  no dispute  regarding the merits of the claim.   The  defendant has admitted the deposit of Rs. 10,00,000 by the  plaintiff, as  well  as the issuing of the five cheques.  We  are  thus clearly  of the view that there is no failure of justice  to the defendant decreeing the suit by the Learned Single Judge of  the  Bombay  High Court, on the  contrary  it  would  be totally  unjust and failure of justice to the  plaintiff  in case  such  objection  relating to  jurisdiction  is  to  be maintained  as  allowed by the Division Bench  of  the  High Court in its appellate jurisdiction. We may also consider the effect of the endorsement  ’Subject to Anand jurisdiction’ made on the deposit receipt issued by the defendant.  In the facts and circumstances of this  case it cannot be disputed that the cause of action had arisen at Bombay  as  the  amount of Rs.  10,00,000  itself  was  paid through  a  cheque of the Bank at Bombay and  the  same  was deposited  in the Bank account of the defendant in the  Bank of  Baroda  at Nariman Point Bombay.  The  five  post  dated cheques were also issued by the defendants being payable  to the plaintiff at Bombay.  The endorsement ’Subject to  Anand jurisdiction’  has been made unilaterally by  the  defendant while issuing the deposit receipt.  The endorsement ’Subject to  Anand jurisdiction’ does not contain the  ouster  clause using  the words like ’alone’, ’only’, ’exclusive’  and  the like.    Thus  the  maxim  ’expression  unius  est   excusio alterius’   cannot   be   applied  under   the   facts   and circumstances of the case and it cannot be held that  merely because  the  deposit receipt  contained  the  endorsement ’Subject to Anand jurisdiction’ it excluded the jurisdiction of  all  other  Courts  who  were  otherwise  competent   to entertain the suit.  The view taken by us finds support from a decision of this Court in A.B.C 464               Laminart  Pvt.  Ltd. & Anr. v. A.P.  Agencies,               Salem [1989] 2 SCR page 1. At  the hearing of the appeal, it was brought to our  notice that by a notification dated May 5, 1992 (subsequent to  the filing  of  the S.L.P.) the defendant has  been  declared  a ’Relief  Undertaking’ under Section 3 of the  Bombay  Relief Undertakings  (Special Provisions) Act, 1958 as amended  and applied  to  the State of Gujarat.  By virtue  of  the  said declaration,   it  is  contended,  the  suit   against   the defendant-undertaking shall have to remain suspended  during the  period of operation of the notification as provided  in Section 4(1)(a)(iv) of the said Act. The Bombay Act was enacted ’to make temporary provisions for Industrial  relations and other matters to enable the  State Government  to  conduct  or to provide  loan,  guarantee  or financial  assistance for the conduct of certain  Industrial undertakings  as a measure of preventing unemployment or  of unemployment relief".  Initially, it was applicable only  to those  industrial undertakings which were started,  acquired or otherwise taken over by the State Government and  carried

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on  or  proposed  to be carried on by itself  or  under  its authority.   But by an amendment made in 1960, the  Act  was made applicable also to industrial undertakings to which any loan,  guarantee  or  other financial  assistance  has  been provided  by  the  State Government.   Section  3  expressly declares  that  on issuance of notification  thereunder  the specified  industrial  undertaking shall  "be  conducted  to serve  as  a  measure  of  preventing  unemployment  or   of unemployment  relief  and undertaking shall  accordingly  be deemed  to be a relief undertaking for the purpose  of  this Act".   Sub-sec.  (2) of Section 3  says  that  notification under  section  3(1) shall have effect for such  period  not exceeding 12 months as may be specified in the notification. It  is,  however, renewable for a like period from  time  to time  so, however, that all the periods in aggregate do  not exceed five years.  Section 4(1) is relevant for our purpose and may be set out in full :               "4(1)  Notwithstanding any law, usage  custom,               contract,  instrument, decree,  order,  award,               submission,  settlement,  standing  order   or               other   provision   whatsoever,   the    State               Government   may,  by  notification   in   the               Official Gazette, direct that :-               (a)in  relation to any relief undertaking  and               in respect of the period for which the  relief               undertaking continues as               465               such under sub-sec. (2) of Section 3-               (i)all  or any of the laws in the Schedule  to               this  Act or any provisions thereof shall  not               apply  (and such relief undertaking  shall  be               exempt  therefrom), or shall, if so  directed,               by the State Government, be applied with  such               modifications (which do not however affect the               policy  of the said laws) as may be  specified               in the notification;               (ii)all or any of the agreements, settlements,               awards  or standing orders made under  any  of               the  laws in the Schedule to this  Act,  which               may   be   applicable   to   the   undertaking               immediately  before it was acquired  or  taken               over  by  the State Government or  before  any               loan, guarantee or other financial  assistance               was  provided to it by, or with  the  approval               of,  the State Government, for being run as  a               relief  undertaking,  shall  be  suspended  in               operation,  or  shall, if so directed  by  the               State   Government,  be  applied   with   such               modifications  as  may  be  specified  in  the               notification;               (iii)rights,   privileges,   obligations   and               liabilities   shall  be  determined   and   be               enforceable in accordance with clauses (i)   and               (ii) and the notification;               (iv)  any  right,  privilege,  obligation   or               liability  accrued  or  incurred  before   the               undertaking was declared a relief  undertaking               and  any  remedy for the  enforcement  thereof               shall   be  suspended  and   all   proceedings               relative  thereto  pending before  any  court,               tribunal,   officer  or  authority  shall   be               stayed;               (b)   the  right,  privilege,  obligation   or               liability referred to in clause (a)(iv) shall,               on  the  notification ceasing to  have  force,

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             revive and be enforceable and. the proceedings               referred to therein shall be continued:               Provided  that  in  computing  the  period  of               limitation for the enforcement of such  right,               privilege, obligation or liability, the period               during which it was suspended under               466               clause     (a)(iv)    shall    be     excluded               notwithstanding anything contained in any  law               for the time being in force." The main reliance of the counsel for the defendants is  upon subclause  (iv)  of Clause (a) of Sub-sec.(1) of  Section  4 which  says  that  "any  remedy for  the  enforcement  of  a liability  accrued  or incurred before the  undertaking  was declared  a  relief undertaking shall be suspended  and  all proceedings relative thereto pending before any Court  shall be stayed for the duration of the notification under Section 3". Mr.  R.F. Nariman, Learned counsel for the defendant  places strong  reliance  upon the decisions of this  Court  in  the State of Bihar v. Charusila Dasi [1959] Suppl. 2 SCR 601 and State of Bihar v. Bhabapritananda Ojha, [1959] Suppl. 2  SCR 624.   According to the Learned counsel the  said  decisions conclusively establish that the suit or other proceedings at Bombay  for enforcement of any remedy against the  defendant relating  to  the said deposit cannot go on so long  as  the aforesaid notification is in operation.  In view of the said contention  it  has  become necessary to  examine  the  said decisions to ascertain their ratio.  In both the cases,  the trusts  were  registered in the State of Bihar.   The  trust properties were situated not only in the State of Bihar  but also  in  the State of West Bengal.  The  Bihar  Legislature enacted  Bihar Hindu Religious Trust Act, 1950  to  regulate the  management  and  functioning of the  public  trusts  in Bihar.   Action  was proposed to be taken against  both  the trusts under the provisions of the Bihar Act.  In the  first case,  Charusila Dasi questioned the said action inter  alia on  the ground that the Bihar Legislature was not  competent to  make a law with respect to a Trust whose properties  are situated  not  only  in Bihar but also in  other  States  in India.   It  was argued that the Bihar  Legislature  has  no extra-territorial  jurisdiction  and since  its  attempt  to control and regulate the activities of the trust is bound to have effect outside the State of Bihar, the Act in  question must  be  held to be outside the legislative  competence  of that  Legislature.   The Constitution  Bench  which  decided Charusila Dasi posed the questioned arising before it in the following words:               "The  question,  therefore,  narrows  down  to               this:  in  so  legislating, has  it  power  to               affect  trust  property which may  be  outside               Bihar  but  which  appertains  to  the   trust               situate in Bihar."               467               The  question  was answered in  the  following               words:               "In  our opinion, the answer to  the  question               must  be  in  the affirmative.  It  is  to  be               remembered  that  with regard to  an  interest               under a trust the beneficiaries only right  is               to have the trust duly administered  according               to  the terms and this right can  normally  be               enforced only at the place where the trust  or                             religious  institution  is situate  or  at  th e

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             trustees’  place  of  residence:  see  Dicey’s               Conflict of Laws, 7th Edition, p.506. The  Act               purports  to  do nothing more.   Its  aim,  as               recited in the preamble, is to provide for the               better   administration  of  Hindu   religious               trusts  in  the  State of Bihar  and  ’or  the               protection of properties appertaining thereto.               This   aim  is  sought  to  be   achieved   by               exercising   control  over  the  trustees   in               personam.   The trust being situate  in  Bihar               the  State has legislative power over  it  and               also  over its trustees or their servants  and               agents who must be in Bihar to administer  the               trust.  Therefore, there is really no question               of the Act having extra-territorial operation.               In  any  case,  the  circumstances  that   the               temples  where  the deities are  installed  at               situated  in  Bihar,  that  the  hospital  and               charitable dispensary are to be established in               Bihar  for the benefit of the Hindu public  in               Bihar  gives enough territorial connection  to               enable the legislature of Bihar to make a  law               with respect to such a trust". It  would be evident from the above passage that the  ground upon  which  the  competence of the  Bihar  Legislature  was upheld  was that the administrative apparatus of  the  trust was  situated  within  the State of Bihar,  wherein  it  was registered and was also having some properties.  The affairs of  the  said  trust  were  sought  to  be  controlled   "by exercising control over the trustees in personam".  In other words,  the Bihar Act, in effect and substance, is  directed towards regulating the management and administration of  the trusts registered in the State of Bihar.  The fact that such trusts also possessed properties outside the State of  Bihar did  not take away the competence of the  Bihar  Legislature which  it acquired on account of territorial nexus.  To  the same  effect  is the decision in Bhabapritananda.   In  this case  there  was  an additional fact.   Long  prior  to  the enactment of the 468 Bihar Act, the Calcutta High Court had framed a scheme under Section  92  of  the Civil Procedure Code  relating  to  the temple  in  question. The Bihar Act,  however,  specifically excluded  the  operation  of Section 92  C.P.C.  Though  the temple  was  situated  in the State of  Bihar  some  of  its properties  were situated within the State of  West  Bengal. The  question again arose with respect to the competence  of the  Bihar  Legislature  to make a law  controlling  such  a trust.  It was held by the Constitution Bench that the Bihar Legislature  was competent to enact the said law  and  since the Bihar Act expressly excluded the application of  Section 92 C.P.C., the scheme framed by the Calcutta High Court with respect to the said temple ceased to the operative with  the coming  into force of the Bihar Act.  The reasoning in  this decision closely follows the reasoning in Charusila Dasi. In  Jaipur  Udyog Ltd. v. Punjab University &  Anr.,  I.L.R. (1981) 1 Punjab & Haryana 624 reliance had been placed on  a decision  of this Court in Inderjit C. Parekh & Ors. v.  B.K Bhau   &  Anr.,  AIR  (1974)  SC.  1183  the  question   for consideration was whether the prosecution against the appel- lants  under  paragraph 76(a) of  the  Employees’  Provident Funds  Scheme, 1952 is liable to be stayed by virtue of  the notification  issued by the Government of Gujarat on May  6, 1972  issued in exercise of the power conferred  by  Section 4(i)(a)(iv)  of  the  Act.   While  dealing  with  the  said

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question  it  was held "the obligations and  liabilities  of these  persons is not comprehended within the words of  Sub- s.(4) of Clause (a) of Section 4(1) shows that the power  of the   State  Government  is  itself  restricted  to   giving directions referred to in sub-clause (iv).  "in relation  to any relief undertaking".  Obligations and liabilities of the directors or other officers of the undertaking are not in  a true  sense obligations and liabilities in relation  to  the relief  undertaking.  In plain and simple language they  are the obligations and liabilities of such persons  themselves. Their  obligations and liabilities have to be viewed from  a different angle than the obligations and liabilities of  the company itself which only act impersonally’. It  was  thus  held  that  the  responsibility  to  pay  the contributions  to the provident fund was of  the  appellants and  if they have defaulted in paying the amount,  they  are liable to be prosecuted under Paragraph 76(a) of the  Scheme which says that if any person fails to pay any  contribution which  he  is liable to pay under the Scheme,  he  shall  be punishable with six months’ imprisonment or with fine  which may  extend  to  Rs. 1,000 or with both.   Such  a  personal liability does not fall within the scope of Section 469 4(i)(a)(iv)  of the Act.  Thus the above case did  not  deal with the question of the competency of the State to make any law  having  extra-territorial operation.  We  further  hold that  the view taken by the Punjab & Haryana High  Court  in the case of Jaipur Udyog Ltd. (supra) is not correct. The question is whether the ratio of the said decisions  has any  application  herein and whether it has  the  effect  of suspending the proceedings in the Bombay Court?  The suit is not   filed  within  the  State  of  Gujarat  nor  are   any proceedings being taken in any Court in Gujarat not, at  any rate, as yet.  The proceedings are being taken to  establish the  plaintiff’s right to recover a particular sum of  money from  the defendant.  The argument of Sri Nariman,  however, is two-fold: Firstly, he says, Section 4(i)(a)(iv)  suspends ’any  right’, privilege, obligation or liability accrued  or incurred  before  the  undertaking  was  declared  a  relief undertaking".    If  the  very  right/liability  itself   is suspended,   no   suit   to  establish   or   enforce   such right/liability can proceed.  Secondly, he says, even though the proceedings are going on in a court outside the State of Gujarat, the outcome of the proceedings are bound to  affect the  undertaking  which  is situated  within  the  State  of Gujarat.  Applying the logic of Charusila Dasi, he says, the Gujarat Legislature is competent to stay the proceedings  in a  court outside the State so long as such  proceedings  are likely  to  have an adverse impact upon  the  undertaking adverse impact in the sense that it disables the undertaking being run as an employment relief undertaking. Mr. Salve, the learned counsel for the  plaintiff/appellant, on  the other hand, submits that the ratio of the  aforesaid decisions  has no application herein and that so long as  no proceedings  are  taken and no execution is  levied  in  the State of Gujarat or against the properties of the  defendant situated  in the State of Gujarat, the bar contained in  the Act does not come into play.  He relies upon the decision of the Delhi High Court in State Bank of India v. Jaipur  Udyog and submits that the same has been approved by this Court in Binod Mills Ltd. v. Suresh Chandra, [1987] 3 SCC 99 at 108. The legislature of a State is competent to make laws for the whole  or  any part of the State [Article  245(1).   It  has exclusive  power  to make laws with respect to  any  of  the matters enumerated in List-II of the Seventh Schedule to the

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Constitution.   Subject to any law made by  the  Parliament, the  State legislature can also make a law with  respect  to any of the matters 470 enumerated  in  List-Ill.  The Bombay Act  is  relatable  to entry  22 of List-III (Industrial and Labour  Disputes)  and probably  to  entry  24 (Welfare of  Labour)  and  entry  20 (Economic and Social Planning).  The Code of Civil Procedure which provides where a particular suit has to be instituted, is  relatable  to  entry 13 of List-III.  It  is  a  central enactment  applicable  to  the  entire  country.   Both  the enactments  relate  to  and  deal  with  different  subject- matters.  There is no question of any inconsistency  between them. The  State legislatures do not possess the power to  make  a law having extra-territorial operation (See Kochanu v. State of Madras, AIR 1960 S.C. 1080.  Only the Parliament has that power [Art. 245(3)].  Charusila Dasi and Bhabapritananda  do not  say  to the contrary as  explained  hereinbefore.   The legislature  of  Gujarat  cannot say  that  obligations  and liabilities  incurred by a ’relief undertaking’ outside  the State  of Gujarat shall remain suspended during  the  period the  notification under Section 3 read with Section 4 is  in operation and/or that no suit or other proceedings can go on in  a court outside the State of Gujarat in respect of  such an obligation/liability.  The legislature may well confer an immunity  (no doubt, temporary) upon the relief  undertaking effective  within  the bounds of State of  Gujarat,  but  it cannot  extend that immunity beyond its bounds.  By  way  of illustration, it cannot say that the sales/purchase effected by the relief undertaking in other State shall not be liable to  sales tax under the law of that other State.  It  cannot prevent  the  other  State from levying  and  realising  (by proceedings, if necessary, against the properties and assets of the undertaking situate outside the State of Gujarat) the tax due from the relief undertaking in respect of the  sales and purchases effected in that State.  Similarly, it  cannot say  that the properties of the relief undertaking  situated in  other States shall not be liable to property  tax.   Nor can it say that those properties cannot be proceeded against for realision of amounts due from the relief undertaking  to third parties in pursuance of decreesiorders made by  courts outside  the  State  of  Gujarat.   It  is  true  that  such proceedings  may  ultimately affect the  relief  undertaking adversely;  they  may  also tend  to  defeat  the  objective underlying the Act and the notification.  But that can’t  be helped.   That  is the limitation of power.   Probably,  for this  reason has the Parliament enacted ’The Sick  Companies (Special  Provisions)  Act, 1985’.  Incidently,  it  may  be mentioned   that  according  to  the  respondentcompany,   a rehabilitation  scheme has been sanctioned by  the  B.I.F.R. for  the  respondent  company on January 21, 1992  but  the inter-corporate depositors are said to have been kept out of the scheme as framed by 471 I.C.I.C.I. Ltd., the operating agency. The  result  of  the above discussion is  that  the  Gujarat Legislature   is  not  competent  to  regulate,  modify   or extinguish  the  obligations and liabilities incurred  by  a ’relief  undertaking’ (declared as such under Section  3  of the  Bombay  Act) outside the State of Gujarat  nor  can  it suspend  or stay the suit or other proceedings  relating  to such  obligations and liabilities.  Section  4(1)(a)(iv)  is not effective to suspend the plaintiff-appellant’s right  to money  nor  can it operate to stay the  proceedings  in  the

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present suit in the Bombay Court.  If and when any execution is  levied  within the State of Gujarat and/or  against  the properties  of  the relief undertaking situated  within  the State  of  Gujarat,  they can be  interdicted  by  the  said notification  read with Section 4(i)(a)(iv) of the  Act,  as held by this Court in Binod mills. In  the result we allow this appeal, set aside the  Judgment of the Division Berch of the High Court dated 24.10.1991 and restore the judgment and decree passed by the Learned Single Judge dated 24.6.1988. In the facts and circumstances of the case we make no order as to costs. G.N. Appeal allowed. 472