Case Analysis

Nusli Neville Wadia  v.  Ivory Properties (2015) 6 SCC 412.

Submitted by:
Ms. Shalini Saxena
(Professor of Law)

Submitted by:
Harshit Karan
BBA.LL.B
IUU16BBL024
Background:
Section 9-A was inserted in the Code of Civil Procedure, 1908 (“the Code”) as an amendment
specific to the State of Maharashtra by the Code of Civil Procedure (Maharashtra
Amendment) Act, 1970 and by way of abundant caution, was reintroduced in the
Code vide the Code of Civil Procedure (Maharashtra Amendment) Act, 1977. The insertion
of Section 9?A in the Code was guided by peculiar circumstances, i.e. at such time, the
practice was followed to initiate declaratory suits without giving valid notice to the
government under Section 80 of the Code. The plaintiff would undertake to issue such notice
and would pray for ad interim injunction. After the expiry of the period for issuance of such
notice, the plaintiff would withdraw the suit and file a fresh one praying for and successfully
obtaining fresh ad interim reliefs from the Court. This vicious cycle was sought to be avoided
by the introduction of Section 9-A in the Code in 1970.
Thereafter, in 2018, the Code of Civil Procedure (Maharashtra Amendment) Act was
notified. The Statement of Objects and Reasons of this amendment inter alia, noted that
Section 9-A was leading to judicial bottlenecks in the form of the application for interim
relief being pending and as a consequence, the interim relief was being continued as final
relief in most cases. Further, the orders passed under Section 9-A was amenable to their own
challenge, leading to a multiplicity of proceedings without any consideration of the matter on
merits.
Section 9-A was accordingly deleted by the above amendment. However, by a second
amendment in 2018, it was provided that the proceedings pending under Section 9-A on the
date of the introduction of the amendment and any preliminary issue framed under Section 9-
A would be decided at the time of final determination of the other issues framed under Order
XIV of the Code, and that any ad-interim relief granted under Section 9-A may be confirmed,
vacated or modified at the stage of final hearing of the interim application.

Facts:

A reference has been made by a Division Bench of the Supreme Court but its order dated
August 17, 2015, doubting the correctness of the decision of the Court in Foreshore
Cooperative Housing Society Limited with respect to the interpretation provisions contained
in Section 9A of CPC as inserted by the Maharashtra Amendment Act, 1977. It had been
opined in that case that the word “jurisdiction” under Section 9A is wide enough to include
the issue of limitation as the expression has been used in the broader sense and is not
restricted to the conventional definition under pecuniary or territorial jurisdiction. Thus, the
decision in Kamalakar Eknath Salunkhe, taking a contrary view, is per incuriam in view of
the larger Bench decision in  Pandurang Dhondi Chougule and Ors. v. Maruti Hari Jadhav and
Ors, as well as other larger Bench decisions.

In  Kamalakar Eknath Salunkhe, the Supreme Court had opined that the issue of limitation
cannot be decided as a preliminary issue of jurisdiction under Sec 9, Reference has been
made because of divergence in views.

Decision of the court:

The Supreme Court held that under the CPC, jurisdiction meant the power of a court to
adjudicate upon a matter and pass an order, whether rightly or not. It was further held that an
illegal exercise of jurisdiction by a court would constitute a jurisdictional error and not an
absence of jurisdiction altogether. Examples of jurisdictional errors are: (i) examination of a
criminal case in the absence of inherent jurisdiction to do so; (ii) entertaining a civil dispute
inspite of a separate statutory mechanism being available for the consideration of such
disputes (e.g. rent control matters, insolvency and bankruptcy matters, consumer disputes,
etc.)

The Supreme Court held that the dismissal of a claim as being barred by limitation by a court
was an exercise of jurisdiction by that court and not an issue of lack of jurisdiction. Similarly,
it was further held that an erroneous decision on the question of limitation would, by itself,
not oust the jurisdiction of a court.

In view of the above, the Supreme Court held that the issue of a claim being barred by
limitation could not be decided by a court as a preliminary issue under Section 9A of the CPC
and must be decided along with the other issues framed in the suit.

Before concluding, the Supreme Court held that an issue of limitation could nevertheless be
considered as a preliminary issue under Order XIV Rule 2(2) (b) of the CPC, subject to such
a challenge being based on admitted facts and not otherwise.

In Nusli Neville Wadia Vs. Ivory Properties (“Nusli Wadia case”), the correctness of
Foreshore Cooperative Housing Society Limited v. Praveen D. Desai (Dead) through Legal
Representatives (“Foreshore”) was considered to determine the scope of the term
“jurisdiction of the court” in Section 9-A of the Code.

In Foreshore (supra), it had been held that the term ‘jurisdiction’ in Section 9A was wide
enough to include the issue of limitation and that the term could not be read in a restricted
sense to include only territorial, pecuniary or subject matter jurisdiction. In order to
determine whether the position taken in Foreshore was correct in law, the Supreme Court
discussed a plethora of judgments passed by the Supreme Court itself as well as various High
Courts to determine whether jurisdiction was an issue of law and fact, whether limitation
could be included within the ambit of jurisdiction, and the scope of Section 9-A vis-à-vis
Order XIV, Rule 2 of the Code.

My Analysis of the Case:

1) Whether Jurisdiction includes limitation in its ambit:

Foreshore (supra) held that although the plea of limitation was a mixed question of law and
fact, Section 9-A was a self-contained scheme with a non-obstante clause that mandates the
court to follow the provision. Further, it held that the question of limitation was synonymous
with jurisdiction, and if the same was raised, it had to be tried as a preliminary issue by the
Court.

In the Nusli Wadia case (supra), during the course of arguments before the Supreme Court,
Mr Fali S. Nariman contended that no issue which was a mixed question of fact and law
could be tried as a preliminary issue under the Code and that the plea of limitation is always a
mixed question of fact and law, and therefore cannot be decided without reference to the
starting point of the limitation period which will be purely factual.

Eventually, in the Nusli Wadia case (supra), it was held that the “jurisdiction to entertain” in
Section 9-A could not be understood within the wide ambit that was held in Foreshore (supra)
and had to be interpreted in the narrow sense. The case drew the distinction between
jurisdiction and limitation by holding that in the event that the Court does not have the
jurisdiction to entertain the suit, it means that the Court does not have the power to entertain
the suit. When a suit is barred by limitation, it means that it is not possible for the Court to
grant the relief as prayed for. While the difference between the two is subtle, the Nusli Wadia
case (supra) has clarified that the scope of Section 9-A is limited to the maintainability and
the competence of the Court to receive the suit for adjudication.

2) Jurisdiction under Section 9-A v. Order XIV, Rule 2:

Order XIV, Rule 2, which was amended in 1977, mandates that the Court has to pronounce
judgment on all issues, and sub-rule (2) states that the Court may try the issue of jurisdiction
of the Court or a bar to the suit created by an law before the settlement of other issues, only if
the preliminary issues are based on law.

While the Supreme Court, in the Nusli Wadia case (supra), held that Section 9-A was not
repugnant to Order XIV, Rule 2, it also clarified that the scope of Section 9-A was limited as
compared to the same of Order XIV, Rule 2. Pertinently, it held that the jurisdiction to
entertain can be contemplated under Section 9-A only if it is a pure question of law, and not a
question of law and fact. It also emphasized that no evidence can be recorded to decide the
preliminary issue of jurisdiction under Section 9-A of the Code as the Code does not
contemplate two full-fledged trials being held to decide preliminary issues as well as the
other issues.

By holding the above, the Supreme Court has effectively reconciled Section 9-A of the Code
with Order XIV, Rule 2. Consequently, while jurisdiction may be tried as a preliminary issue,
for all the remaining cases under Section 9-A, the Court will also have to adhere to the
principles of Order XIV, Rule 2. In other words, only issues of law can be treated as
preliminary issues.

3) Jurisdiction under the Arbitration and Conciliation Act, 1996:

While the Nusli Wadia case (supra) did not specifically deal with the scope of jurisdiction in
arbitration proceedings, the judgment in Indian Farmers Fertilizer Cooperative Limited v.
Bhadra Products[3] (“Indian Farmer’s case”) has been referred to in the judgment. The Indian
Farmers case was referred to in order to understand the meaning of jurisdiction in different
legislation and the interpretation of the same in case law.

In the Indian Farmers case (supra), it was observed that limitation did not fall under the ambit
of jurisdiction under Section 16 of the Arbitration and Conciliation Act, 1996 (“Arbitration
Act”) and accordingly held that when a jurisdictional challenge is upheld, it is an appealable
order under Section 37 of the Arbitration Act. While the Indian Farmers case sought to clarify
the scope of jurisdiction in arbitration proceedings, since the Nusli Wadia case (supra) has
not opined on it, it is probable that the judgment in the Nusli Wadia case (supra) will have an
effect on the interpretation of the term in the future.