Holding

The Bombay High Court had jurisdiction; the endorsement did not oust it, the appellate court could not entertain the jurisdictional objection, and the relief‑undertaking notification did not stay the suit.

Summary

R.S.D.V. Finance Co. deposited Rs.10,00,000 with Vallabh Glass Works for 90 days at 19% interest. When the deposit matured, the defendant failed to pay and issued five post‑dated cheques that later bounced, prompting a summary suit. The defendant argued that the deposit receipt’s endorsement "Subject to Anand jurisdiction" removed Bombay High Court’s jurisdiction and that a notification under the Bombay Relief Undertakings (Special Provisions) Act, 1958 suspended the suit. The Supreme Court held that the endorsement did not oust jurisdiction, the suit was also based on the post‑dated cheques payable in Bombay, and the conditions for raising a jurisdictional objection under CPC §21(1) were not satisfied. Moreover, the relief‑undertaking notification could not stay proceedings outside Gujarat. Consequently, the appeal was allowed and the decree of the Single Judge restored.

Issues considered

Whether the endorsement "Subject to Anand jurisdiction" on the deposit receipt excluded the jurisdiction of the Bombay High Court.
Whether a jurisdictional objection can be entertained by an appellate court under CPC §21(1) when the conditions are not met.
Whether the notification under the Bombay Relief Undertakings (Special Provisions) Act, 1958, Section 4(1)(a)(iv) suspends the suit.
Whether interest could be claimed after the maturity of the deposit.

Legislation cited

Bombay Relief Undertakings (Special Provisions) Act, 1958s. 3, s. 4(1)(a)(iv)
Code of Civil Procedure, 1908s. 2, s. 21(1)
Sick Companies (Special Provisions) Act, 1985

Subjects

jurisdictiondeposit receipt endorsementCPC §21relief undertakinginterest after maturitypost‑dated chequesBombay High Courtextraterritorial legislation

Judgment

R.S.D.V. FINANCE CO. PVT. LTD. A
v.
VALLABH GLASS WORKS LTD.

FEBRUARY 3, 1993

(KULDIP SINGH, N.M. KASLIWAL AND B.P. JEEVAN B
REDDY, JJ.]

Code of Civil Procedure, 1908:

Section 2()-{urisdiction-Deposit Receipt containing endorsement sub- C
ject to jurisdiction of a particular place-Whether excludes jurisdiction of all
other Courts otherwise competent to entertain the suit.

Section 21( 1)-0bjection to jurisdiction-Plea before Appellate or
Revisiona/ Court-Conditions-Whether al/ the conditions are to be fulfilled.
D
Bombay Relief Undertaking (Special Provisions) Act, 1958 :

Sections 3 and 4(l)(a)(iv)-Notification declaring relief-Undertak-
ing-Extending beyond the State immunity to Relief Undertaking from legal
liability-Competence of State Legislature.
E
The appellant deposited with the Respondent a sum or Rs. 10,00,000
for a period or 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 railed to pay the amount
on maturity and requested the appellant to continue the said deposit till F
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.
G
The Respondent contested the suit on the ground or jurisdiction. It
A. 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. H
455
456 SUPREME COURT REPORTS (1993] 1 S.C.R.
A The Respondent preferred an appeal and the Division Bench allowed
the same and dismissed the suit.

· Aggrieved by the ~udgment of the Division Bench, the appellant bas
preferred the present appeal.

B Allowing the apptal, this Court,

HELD : 1.1. Admittedly, leave to defend the suit was obtained by the
defendent 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 bad no jurisdiction
C 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
bad 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 ~
, D 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
pl'esentation to the proper Court and not to dismiss the suit. [462D·Fl

1.2. Sub-section (1) of Section 21 of the Code of Civil Procedure
E 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
F 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 bas been a consequent failu~ of
justice. [462G-H)

2. In the instant case the condition of failure of justice is uot
G fulfilled. There was no dispute regarding the merits of the claim. The
defendant bas admitted the deposit of Rs. 10,00,000 by the plaintiff, as well
as the lssning of the five cheques. There is ilo. 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
H objection relating to jurisdiction is to be maintained as allowed by the
RS.D.V. FINANCE v. VALLABH GLASS 457
Division Bench or the High Court in its appellate jurisdiction. [463 C·D] A
A.B.C. Laminaft Pvt. Ltd. & Anr. v. A.P. Agencies, Salem, [1989] 2
SCR page 1, relied on.

3. It cannot be disputed that the cause or action had arisen at
Bombay as the amount of Rs. 10,00,000 itself was paid through .a cheque B
at Bombay and the same was deposited in the bank account of the defen-
dent in Bombay. The five post dated c~ques 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 deren·
dent while issuing the deposit receipt. This endorsement does not contain C
the ouster clause using the words like 'alone', 'only', 'exclusive' and the
like. Thus the maxim expressio unius est exclusio alterius cannot be applied
nuder 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. [4630-H] D

4. The legislature or a State is competent to make laws for the whole
11r any part or the State. It has exclusive power to make laws with respect
to any or the matters enumerated in List-II or the Seventh Schedule to the
Constitution. Subject to any law,made by the Parliament, the State Legis- E
lature can also make a law with respect to any or the matters enumerated
in List-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-III. It is a central enactment
applicable to the entire country. Both the enactments relate to and deal F
with different subjects-matters. There is no question or.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 Indeljit C. G
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. H
458 SUPREME COURT REPORTS [1993) 1 S.C.R.
A 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 l.;ounds 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, again~t the properties and assets of the
B undertaking situate outside the state) the tax due from the relief under-
taking in respect of the sales and purchases effected in that State. Similar-
ly, 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
C 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
D enacted tlie 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
E 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 again.st the proper·
F 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]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 380 of
G 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, KJ. John, Ms. Deepa Dixit for Mis
H Swarup John & Co. for the Appellant.
R.S.D.V. FINANCE v. VALLABH GLASS [KASLIWAL, J.] 459
Raian Karanjawala, Ms. M. Karanjawala and Ms. P. Mullice for the A
Respondent.

The Judgment of the Court was delivered by

KASLIWAL, J. Special Leave granted.
B
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 c
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 D
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
E
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 Novem-
ber, 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 F
payment but the same were dishonoured 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 @ 19% per annum
with 90 days rests.

The defendant in the written statement submitted that the fixed G
deposit receipt contained the endorsement 'Subject to Anand jurisdiction'
arc 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 H
I
-+
460 SUPREME COURT REPORTS [1993] 1 S.C.R.
A 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
B
the deposit receipt. The Learned ~ingle 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 als0 took note of the fact that the High Court at Bombay had already
C 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
D of the averments made in para 13 of the plaint which clearly mentioned
that the deposit was obtained by the 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.
E 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
F 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
G 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
H dates on which those cheques become due and payable. The Lea~ned
l
R.S.D.V. FINANCE v. VALLABH GLASS [KASLIWAL, J.] 461
Single Judge as such passed a decree in favour of the plaintiff and against A
)._ 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.
B
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
A of the case, 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 c
....,. 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 D
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
E
>- 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 F
weeks from 11.1.1988. The defendant preferred an appeal against the
} aforesaid order of the Learned Single Judge dated 11.1.1988. The state·
men! of the Learned counsel for the defendant in the aforesaid appeal
proceedings was recorded to the effect that the only defence to the suit
was to be on the point that the High Court of Bombay had no jurisdiction
G
to entertain the suit and the defendant would not contest the plaintiffs
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
.A.
be tried as a commercial cause only to the aspect of jurisdiction.

We have heard Learned counsel for the parties and have perused the H
462 SUPREME COURT REPORTS (1993( 1 S.C.R.
A record. lit our view the Learne.d 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 al the Bank
of Baroda, Nariman Point, Bombay. On 11.7.1983 the defendant issued a
B 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
C 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.
D 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 an endorse-
ment of 'Subject to Anand jurisdiction'. The entire reading of the plaint
E 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
F 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
G 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
B such settlement and unless there has been consequent failure of justice.
R.S.D.V. FINANCE'" VALLABH GLASS [KASLIWAL, J.] 463
The above provision clearly lays down that such objection as to the place A
of suing shall be allowed by the appellate or revisional court subject to the
following conditions :-

(i) That such objection was taken in the Court of first
instance at the earliest possible opportunity;
B
(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 C
the third condition of failure of justice is not fulfilled. As already men-
tioned 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 D
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 E
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 F
Nariman Point Bombay. The five post dated cheques were also issued by
tP,e 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', G
'only', 'exclusive' and the like. Thus the maxim 'expressio 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. H
t

~ J
464 SUPREME COURT REPORTS (1993) 1 S.C.R.
A 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
B and applied to the State of Gujarat. By virtue of the said declaration, it is
contended, the suit against t~e 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.

c Industrial
The Bombay Act was enacted "to make temporary provisions for
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

D
to those industrial undertakings which were started, acquired or otherwise
~
taken over by the. State Government and carried on or proposed to be
carried on by itself O{! under its authority. But by an amendment mad~ 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 a'overnment. Section 3 expressly declares that on issuance of notifica-
E tion thereunder the specified industrial undertaking shall 'be conducted to
serve as a measure of preventing unemployment or of unemployment relief ..-(

and undertaking shall aceordingly be deemed lo 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, l\owever, renewable
F •
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 : -(
I
t.;

G
·"4(1) Notwithstanding any law, usage custom, contract,
instrument, decree, order, award, submission, settlement,
I,,
standing order or other provision whatsoever, the State
Government may, by notification in the Official Gazette,
direct that :-
A
H
(a) in relation to any relief undertaking and in respect of
the period for which the relief undertaking continues as I
·1
I•'
.>
R.S.D.V. FINANCE v. VALLABH GLASS (KASLIWAL, J.J 465
such under sub-sec. (2) of Section 3- A
(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 B
the said laws) as may be specified in the notification;
,
A (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 c
undertaking immediately before it was acquired or taken
over by the State Government or before any loan, guaran-
tee 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,
D
or shall, if so directed by the State Government, be applied
with such modifications as may be specified ln the notifica-
tion;

(iii) rights, privileges, obligations and liabilities shall be
determined and be enforceable in accordance with clauses E
(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 F
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
G
force, revive and be. enforceable· and the proceedings
referred to therein shall be continued :

A 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 H
\.
466 SUPREME COURT REPORTS (1993) 1 S.C.R.
A 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 sub-
clause (iv) of Clause (a) of Sub-sec.(1) of Section 4 which says that "any
B remedy for the enforcement of a liability a=ued or incurred before the
undertaking was declared a relief undertaking shall be suspended and all
proceedings relative the.reto 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
C reliance upon the decisions of this Court in the State of Bihar v. Charusila
Das4 (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 Bom-
bay for enforcement of any remedy against the defendant relating to the
D 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
E 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 ollo on the gtound that the Bihar Legislature was not
competent to make a law with respect to a Trust whose properties are
F 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
G it in the following words :

"The queation, theref(!rc; llllTOWI down to thil: In 10
leglalat1ns1 bu It power to dect trult pral>erty which may
be out1lde Blhar but which appertlinl to the truat 1ltu1te
.H In Blhar'.
R.S.D.V. FINANCE v. V AI..LABH GLASS (KASLIWAL, J.] 467
The question was answered in the following words: A

"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 B
this right can normally be enforced only at the place where
the trust or religious institution is situate or at the 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 C
Bihar and for 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 D
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 arc to be es·
tabalished in Bihar for the bene!it of the Hindu public in E
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 F
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
tho trustees in personam". In other words, the Bihar Act, in effect and G
substance, Is directed towards regulating the management and administra·
tion of the trusts registered In the State of Blhar. The fact that such tru1ts
allo posseHed properties outside the Stat~of llihar did not take away the
competence of the Blh11r Lcsislaturc ~ch It acquired on account of
territorial nexus. To the 1ame effect 11 the dealalon In Bhoboprt1ananda. In
thl1 C&IC there WAI an addilfQ"ilal taet. Lona prior to the lftlotment or the H
468 SUPREME COURT REPORTS [1993] 1 S.C.R.
A 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 <>f 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
B 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
C reasoning in this decision closely follows the reasoning in Charusila Dasi.

In Jaipur Udyog Ltd. v. Punjab University & Anr., l.L.R. (1981) 1
Punjab & Haryana 624 reliance had been placed on a decision of this Court
in lnderjit C. Parekh & Ors. v. B.K. Bhatt & Anr., AIR (1974) SC. 1183 the
D 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
question it was held "the obligations and liabilities of these persons is not
E 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-clausr. (iv). "In relation to any relief undertak-
ing'. Obligations and liabilities of the directors or other officers of the
undertaking are not in a true sense obligations and liabilities in relation to
F 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
G provident fund was of the appellants and if they have defaulted in paying
the amount, they are liable to be prosecuted 11nder 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
H both. Such a personal liability does not fall within the scope of Section
R.S.D.V. FINANCE v. VALLABH GLASS [KASLIWAL, J.) 469
4(i)(a)(iv) of the Act. Thus the above case did not deal with the question A
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 proceed-
B
ings 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
,4. rate, as yet. The proceedings are being taken to establish the plaintiffs 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) c
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 Slate of Gujarat, the outcome of the D
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. E

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 F
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 bidia 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.
G
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 Constitution. Subject to any law made by the Parliament,
the State legislature can also make a law with respect to any of the matters H
470 SUPREME COURT REPORTS [1993) 1 S.C.R.
A enumerated in List-III. The Bombay Act is relateable 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
B
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
C 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
D 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.
E It cannot prevent the other State· from levying and realising (by proceed-
ings, if neeessary, 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
F States shall not be liable to property tax. Nor can it say that those proper-
ties 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 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
G 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 respondent-
company, a rehabilitation scheme bas been sanctioned by the B.I.F.R. for
the respondent - company on January 21, 1992 but the inter-corporate
H depositors are said to have been kept out of the scheme as framed by
R.S.D.V. FINANCE v. VALLABH GLASS [KASLIWAL, J.] 471
I.C.I.C.1. Ltd, the operating agency. A
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. B
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
Guiarat and/or against the properties of the relief undertaking situated
within the State of Gujarat, they can be interdicted by the said notification C
read with Section 4(i)(a)(iv) of the Act, as held by this Court in Binod
Mills. .

Jo the result we allow this appeal, set aside the Judgment of the
Division Benc)t of the High Court dated 24.10.1991 and restore the judg-
ment and decree passed by the Learned Single Judge dated 24.6.1988. In 0
the facts and circumstances of the case we make no order as to costs.

G.N. Appeal allowed.