1993 (2) TMI 279 - SC - Indian Laws

Whether the legislature of a State is competent to make laws for the whole or any part of the State ? Held 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 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 1987 (5) TMI 368 - SUPREME COURT . Allow this appeal, set aside the Judgment of the Division Bench of the High Court

Issues Involved:
1. Jurisdiction of the Bombay High Court to entertain the suit.
2. Claim for compound interest by the plaintiff.
3. Suspension of the suit due to the defendant being declared a 'Relief Undertaking' under the Bombay Relief Undertakings (Special Provisions) Act, 1958.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Bombay High Court to entertain the suit:

The plaintiff, a finance company, filed a summary suit against the defendant for the recovery of Rs. 10,00,000 along with interest. The defendant contested the jurisdiction of the Bombay High Court based on an endorsement on the deposit receipt stating "Subject to Anand jurisdiction." The Learned Single Judge found that the Bombay High Court had jurisdiction since the suit was also based on five post-dated cheques payable in Bombay and leave under Clause XII of the Letters Patent had been granted. The Division Bench, however, revoked this leave and dismissed the suit, holding that the Bombay High Court had no jurisdiction. The Supreme Court disagreed with the Division Bench, emphasizing that the cause of action arose in Bombay where the cheques were payable and the deposit was made. The endorsement "Subject to Anand jurisdiction" did not exclusively oust the jurisdiction of other competent courts. The Supreme Court restored the judgment of the Learned Single Judge, affirming the jurisdiction of the Bombay High Court.

2. Claim for compound interest by the plaintiff:

The plaintiff claimed compound interest on the principal amount. The Learned Single Judge held that the claim for compound interest was unsustainable and answered this issue in the negative. The Supreme Court did not find any reason to overturn this finding, thus maintaining that the plaintiff was not entitled to compound interest.

3. Suspension of the suit due to the defendant being declared a 'Relief Undertaking':

During the appeal, it was noted that the defendant had been declared a 'Relief Undertaking' under the Bombay Relief Undertakings (Special Provisions) Act, 1958, which could potentially suspend the suit. The Supreme Court examined the relevant provisions and previous judgments, concluding that the Gujarat Legislature could not suspend or stay suits filed outside the State of Gujarat. The suspension of rights and liabilities under Section 4(1)(a)(iv) of the Act could not extend beyond the state's territorial limits. Therefore, the suit in the Bombay High Court could proceed despite the notification declaring the defendant a 'Relief Undertaking.'

Conclusion:

The Supreme Court allowed the appeal, setting aside the Division Bench's judgment and restoring the judgment and decree of the Learned Single Judge. The Bombay High Court was found to have jurisdiction, the claim for compound interest was denied, and the suspension of the suit under the Bombay Relief Undertakings (Special Provisions) Act, 1958, was deemed inapplicable to proceedings outside Gujarat. The appeal was allowed with no order as to costs.

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