Resilient Innovations Private vs Phonepe Private Limited (11/03/2022)

A judgment is only an authority for the proposition for what it actually decides and not for what is inferred from the ratio of a judgment

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL APPELLATE DIVISION

COMM. APPEAL (L) NO. 24917 OF 2021
IN
INTERIM APPLICATION (L) NO. 24138 OF 2021
IN
COMIP SUIT (L) NO. 24136 OF 2021
WITH
INTERIM APPLICATION (L) NO.24920 OF 2021

Resilient Innovations Private Limited,
90/20 Malviya Nagar, South Delhi,
Delhi – 110 017 … Appellant

Versus

PhonePe Private Limited,
with its registered office at Unit No.001,
Ground Floor, Boston House, Suren Road,
Off. Andheri Kurla Road, Andheri (East),
Mumbai – 400 093 … Respondent

Mr. D.J.Khambatta, Senior Advocate with Mr. Sharan Jagtiani, Senior Advocate with
Mr. Nishad Nadkarni, Mr. Mohit Goel, Mr. Siddhant Goel, Mr. Asif Navodia, Ms.
Khushboo Jhunjhunwala, Mr. Deepankar Mishra, Mr. Aditya Goel, Mr. Abhishek
Kotnawal i/by Khaitan and Co., for Appellant.

Mr. Janak Dwarkadas, Senior Advocate with Mr. Venkatesh Dhond, Senior Advocate
with Mr. Hiren Kamod, Mr. Manish Jha, Mr. Hormuz Mehta, Ms. Anjali Anchayil,
Mr. Yohaann Limathwala, Mr. Ahsan Allana i/by J. Sagar Associate, for Respondent.

CORAM: S.J. KATHAWALLA & MILIND N. JADHAV, JJ.

RESERVED ON: 2nd DECEMBER, 2021
PRONOUNCED ON : 11th MARCH, 2022

JUDGMENT :

(Per S.J. Kathawalla & Milind Jadhav, JJ.)

1. This Appeal, filed under Section 13 of the Commercial Courts Act, 2015 (“the Act”) challenges an Order of the Learned Single Judge dated 22 nd October 2021. By that Order, the Respondent (Plaintiff in the proceedings before the Learned Single Judge) was given leave to withdraw its suit with liberty to file a fresh suit on the same cause of action. The leave to withdraw with such liberty was granted by the Learned Single Judge by seeking to exercise powers under Order 23 Rule 1(3) of the Code of Civil Procedure, 1908 (“the CPC”). The Appellant–Defendant before the Learned Single Judge, has filed this appeal taking exception to the grant of liberty to file a fresh suit on the same cause of action.

2. Briefly stated, the Appellant contends that no ground for granting such liberty was either made out by the Respondent or noted in the Impugned Order to justify the grant of such liberty under Order 23 Rule 1(3). The grievance is that without the requirements for grant of such liberty under the said provision being satisfied, the Learned Single Judge was in error in exercising such power. It was contended that the grant of such liberty without the requirements of the provisions being satisfied amount to a jurisdictional error in the Impugned Order.

3. Before referring to the nature of proceedings before the Learned Single Judge and the Impugned Order, it is to be noted at the outset that the Respondent has raised an issue of the very maintainability of this Appeal under Section 13 of the Act. Both parties have made extensive submissions on this aspect and also on the merits of the Appeal on the assumption that it is maintainable. In fact, the order in which submissions were made by the Appellant was to address the aspect of merits and the substantive law under Order 23 Rule 1(3), and thereafter argue how an Order of such nature is appealable under Section 13 of the Act. The Respondents submissions also proceed in a similar manner of addressing the substantive issue of exercise of power under Order 23 Rule 1(3) first and then the issue of maintainability.

4. However, since our jurisdiction to decide the Appeal depends upon it being maintainable, we have addressed that issue first in our discussions and findings below.

BRIEF FACTS AND PROCEEDINGS IN THE APPEAL

5. The Respondent/Plaintiff filed Commercial IP Suit (L) 24136 of 2021 (“the First Suit” or “the Withdrawn Suit”) against the Appellant/Defendant in this Court. The First Suit was based on a cause of action of infringement of trade mark and passing off of the Respondents mark ‘Phonepe’ and its variants. Since we are not at all considering the merits of the intellectual property rights disputes between the parties we are not setting out the rival marks. It would suffice to note that the rival marks have been reproduced by the Respondent/Plaintiff in paragraph 1 of the plaint in the First Suit and in paragraph 2 of the one of the written submissions on behalf of Respondent tendered on 29th November, 2021.

6. The First Suit was filed 20th October, 2021 In the First Suit the Respondent filed Interim Application (L) No. 24138 of 2021 (“the Interim Application”) for ad interim and interim injunctions against the Appellant/Defendant from infringing the registered trademarks of the Respondent/Plaintiff.

7. The Interim Application in the First Suit was moved for urgent ad-interim reliefs by the Respondent/Plaintiff before the Learned Single Judge. It is at this first hearing of the application for ad-interim reliefs that the Impugned Order came to be passed. This Appeal preferred against the Impugned Order was heard by us on 28 th October, 2021 shortly before the commencement of the Diwali Court vacations. Thereafter, and in pursuance of the liberty so granted by the Impugned Order, the Respondent/Original Plaintiff filed another suit, being Commercial IP Suit No. 25032 of 2021 (“the Second Suit”). The Second Suit was moved before one of us (S.J. Kathawalla, J.) then presiding as a Single Judge during the Diwali vacations for urgent ad-interim reliefs. However, since this Appeal was part heard and the hearing was to resume after the Court Diwali Vacations, by an Order dated 8th November, 2021, no ad-interim reliefs were considered or granted in the Second Suit and it was made clear that the same would not be considered during the pendency of the present Appeal as the Appeal goes to the very maintainability or institution of the Second Suit filed pursuant to the liberty granted by the Impugned Order. The hearing of this Appeal then resumed after the Diwali vacations and concluded on 2 nd December, 2021.

THE IMPUGNED ORDER

8. Since the Impugned Order is brief and both sides have referred to it in support of their various submissions, it would be appropriate to reproduce it in its entirety :

“1. The Application seeks protection of the Plaintiff’s mark PHONEPE. The competing mark by the Defendants is POSTPE. Both are mobile phone-based services. The Defendants’ mark is used in respect of what is said to be the equivalent of a digital credit card rather than the traditional UPI-based debit card system used by the Plaintiff.

2. The Plaintiff and the Defendants are no strangers to each other. They have been at war before, most notably in the Delhi High SSP 4/27 Court where the Plaintiff sued the Defendants — unsuccessfully as it turns out — over the Defendants’ introduction of a service under the mark BHARATPE.

3. In the contest today between PHONEPE and POSTPE, considerations may be significantly different than they were between PHONEPE and BHARATPE. Some of the determinants that were held against the Plaintiff in the PHONEPE/BHARATPE battle may not apply here.

4. But the real difficulty in the Plaintiff’s way is that in paragraph after paragraph of the Plaint, prima facie there appears to be an attempt by the Plaintiff to claim some sort of exclusivity or distinctiveness in a part of its mark i.e. “PE”. We find this in paragraphs 21, 22, 32, 41, 43, 45, 46, 47, 48, and 56. In all these paragraphs, the entire presentation is on the Defendants’ use of the word PE. It is only in one line in paragraph 56 that the Plaintiff claims that mark should be ‘taken as a whole’.

5. I cannot agree with Dr Saraf when he says that these two stands, i.e. taking PHONEPE as a whole while simultaneously claiming similarities in the use of PE are not mutually contradictory or not inconsistent.

6. To put it differently: the Plaintiff has no registration of the word mark PE per se. It has a label or device mark with the Devanagari word PE. It claims that ‘Phone’ is not unique or distinctive, and that the word PE is distinctive, and is a central, leading and memorable feature. It then claims that the Defendants’ use of PE is an infringement. But if the law is that the ‘mark must be taken as a whole’, then one must look at PHONEPE and set it against POSTPE. Then one would test for visual, structural and phonetic similarity. But except for one line in one paragraph, the plaint only draws a comparison between the rival uses of PE, clearly claiming exclusivity over that expression disconnected from the ‘mark taken as a whole’. If the Plaintiff has no exclusivity over the mark PE, I do not see how it can claim this exclusivity indirectly in paragraph after paragraph of the Plaint. It is one thing to say that the Defendants’ mark, taken as a whole is to close to the Plaintiff’s SSP 5/27 mark, also taken as a whole. It is quite another to take an element of each, which cannot possibly the subject of exclusivity, and then claim injunctions on that basis.

7. At this stage, after this part of the order is dictated in open court, Dr Saraf, on instructions seeks leave to withdraw the Suit and the IA with liberty to file a fresh Suit restricting the claim to the mark PHONEPE taken as a whole. Whether or not to press the Suit is the Plaintiff’s decision. The Suit and the IA are allowed to be withdrawn.

8. As to the liberty, I will grant that liberty conditionally, i.e. not only keeping all contentions open on behalf of the Defendants but also giving the Defendants liberty to rely on the present plaint and this order in opposition to any fresh suit or IA inter alia to contend that the Plaintiff has taken different stands at different time and in different courts.

9. It is for this reason that I have retained the reasoned judgment that I dictated earlier. I will not delete those reasons only because an application for withdrawal is being made at this very late stage.

10. Court fees are to be refunded in accordance with the Rules. For the purposes of Section 43 of the Maharashtra Court Fees Act and the proviso to that Section, today’s date is the date of making a claim for repayment. The Prothonotary & Senior Master will issue a certificate for a refund of Court Fees computed according to the Rules. He will act on production of an authenticated copy of this order without requiring a separate application.

11. All concerned will act on production of a digitally signed copy of this order.”

ISSUES FOR CONSIDERATION

9. In light of the above, the following issues arise for consideration :

(i) Whether the Appeal against the Impugned Order is maintainable under Section 13 of the Act?
(ii) If the first issue is answered in the affirmative, whether the Impugned Order, insofar as it grants liberty to the Respondent/Plaintiff to file a fresh Suit restricting the claim to the mark PHONEPE taken as a whole and subject to the conditions for granting such liberty, is in accord with Order 23 Rule 1(3) of the CPC?

SUBMISSIONS ON ISSUE

(i) – Re. Maintainability of this Appeal

10. Shri Khambata, learned Senior Advocate for the Appellant, has contended that the Appeal is maintainable under Section 13 of the Act as the Impugned Order is a ‘judgment’ and ‘decree’ within the meaning of the Act read with the relevant provisions of the CPC. Reliance was placed on the definitions of these terms under the CPC. He has clarified that he is not relying upon the wider meaning of the expression ‘judgment’ within the meaning of Clause 15 of the Letters Patent that applies to non- commercial suits filed within the original jurisdiction of this Court.

11. In support of the submission that the Impugned Order is a ‘decree’ within the meaning of Section 2(2) of the CPC, and therefore appealable under Section 13(1) of the Act, various provisions of the CPC were sought to be analysed to contend that the definition of ‘decree’ is not restricted to a final adjudication on the merits of the dispute as raised in the pleadings filed in a suit. Emphasis was laid on the requirement of a decree only having to ‘conclusively determine the rights of the parties with regard to all or any of the matters in controversy in the suit’. It was submitted that the adjudication of a matter in controversy does not have to relate to the merits of the case. The expression ‘matters in controversy’ is wider than the expression ‘matter in issue’, which expression has not been used in the definition of ‘decree’ but in other provisions of the CPC such as Section 10 and 11 of the CPC and Order 1 Rule 8, Order 1 Rule 10A, Order 32 Rule 10(2) of the CPC. The distinction between a ‘matter in SSP 7/27 controversy’ and a ‘matter in issue’ was also sought to be made by relying upon Halsbury’s Laws on India.

12. Shri Khambata also relied upon the following judgments to support the submission noted above :

(i) Mangluram Dewangan v. Surendra Singh and Ors. (2011) 12 SCC 773   
(ii) Rishabh Chand Jain v. Ganesh Chandra Jain (2016) 6 SCC 675
(iii) Kandapazha Nadar v. Chitraganiammal (2007) 7 SCC 65
(iv) K.S. Bhoopathy v. Kokila (2000) 5 SCC 458
(v) Anil Kumar Singh v. Vijay Pal Singh (2018) 8 SCC 501

13. The main submission that was made by relying upon these judgments was that whilst a withdrawal of a suit requires no adjudication at all, in a case where leave to withdraw is being granted by the Court under Order 23 Rule 1(3) of the CPC there is an adjudication to be made by the Court and in so far as that adjudication is concerned there is a finality to it. Such adjudication, it is submitted by relying upon K.S. Bhoopathy V/s. Kokila (supra), would result in the unsuccessful plaintiff to avoid the decree against him and seek a fresh adjudication of the controversy on a clean slate and that grant of such permission may also result in annulment of a right vested in the defendant. Reliance was also placed on the judgment in Mangluram Dewangan V/s. Surendra Singh and Ors. (Supra), which held that an adjudication that the right to sue does not survive is in circumstances a decree. It was argued that just as an adjudication on abatement in certain circumstances is held to be a decree although there is no adjudication on the merits of the dispute, so also an order permitting withdrawal with grant of leave to file a fresh suit on the same cause of action also ought to be a decree under the CPC especially when important rights of the defendant to take advantage of admissions made in the plaint are taken away by allowing the plaintiff to file a fresh suit on a clean slate. Reliance was also placed on the judgment in Kandapazha Nadar V/s. Chitraganiammal (Supra), which held that withdrawal of a suit without permission decides nothing and is not a decree and that it must follow as a natural sequitur that withdrawal with permission would be a decree.

14. On the other hand, Shri Dwarkadas, learned Senior Advocate for the Respondent strongly opposed the maintainability of the Appeal. It was submitted that the judgments that were relied upon by the Appellant are prior to the enactment of the Act and the Court did not have the occasion to test the provisions of the CPC within the ambit of the Act. In any event, it was submitted that no support can be drawn from the judgments that have held that adjudication of the issue of abatement, being an issue collateral to the dispute in a suit, is a decree. In those cases, the reason for the order of abatement being a decree is because there is a clear finding that the right to sue does not survive and it deprives the legal representative of pursuing that cause of action in either that suit or any other suit for all times to come.

15. It was also contended by Shri Dwarkadas that even if Section 13(1) of the Act were to apply to ‘decrees’ under the CPC, the legislative intent of Section 13(2) of the Act, being a non-obstante clause, would control what decrees are appealable under Section 13 of the Act.

16. Shri Dwarkadas also relied upon various judgments to contend that the word ‘judgment’ appearing in Section 13(1-A) of the Act cannot be equated to the wider meaning placed on the word judgment in Clause 15 of the Letters Patent. We do not, however, find it necessary to discuss this submission in greater details as Shri Khambata for the Appellant has clarified that he is not relying upon the wider definition of ‘judgment’ in support of the maintainability of this Appeal and that he is instead relying upon the definition of ‘decree’ under the CPC.

FINDINGS ON ISSUE (i)

17. As the first issue that arises for our consideration pertain to the maintainability of this Appeal, it would be appropriate to deal with it before discussing the merits of this Appeal. We would first have to consider the scope of Section 13 of the Act and then depending upon its scope, we would have to consider the Impugned Order to determine if it falls within Section 13(1) of the Act.

18. Section 13 of the Act is part of Chapter IV of the Act, which deals with Appeals. Section 13 of the Act reads as follows :

“13. Appeals from decrees of Commercial Courts and Commercial Divisions – (1) Any person aggrieved by the judgment or order of a Commercial Court below the level of a District Judge may appeal to the Commercial Appellate Court within a period of sixty days from the date of judgment or order. (1-A) Any person aggrieved by the judgment or order of a Commercial Court at the level of District Judge exercising original civil jurisdiction or, as the case may be, Commercial Division of High Court may appeal to the Commercial Appellate Division of that High Court within a period of sixty days from the date of the judgment or order :

Provided that an appeal shall lie from such orders passed by a Commercial Division or a Commercial Court that are specifically enumerated under Order XLIII of the Code of Civil SSP 10/27 Procedure, 1908 (5 of 1908) as amdned by this Act and Section 37 of the Arbitration and Conciliation Act, 1996 (26 of 1996). (2) Notwithstanding anything contained in any other law for the time being in force or Letters Patent of a High Court, no appeal shall lie from any order or decree of a Commercial Division or Commercial Court otherwise than in accordance with the provisions of this Act.”

19. Whilst the sub-heading of Section 13 describes it as pertaining to appeals from decrees of Commercial Courts and Commercial Divisions, Section 13(1) of the Act does not use the expression ‘decree’ but instead uses the expression ‘judgment or order’. “Judgment” is not defined in the Act but Section 2(2) of the Act states that words and expressions used and not defined in the Act but defined in the CPC and the Indian Evidence Act, 1872, shall have the same meaning assigned to them in that Code and the Indian Evidence Act. Accordingly, “judgment” as used in Section 13(1) of the Act must be understood in the manner as defined in Section 2(9) of the CPC.

20. Section 2(9) of the CPC defines “judgment to mean “… a statement given by the Judge on the grounds of a decree or order”. A judgment is, therefore, a statement of reasons in support of a decree or order. It includes within it a ‘decree’ under the CPC. The expression ‘decree’ has not been defined separately in the Act, but is defined in Section 2(2) of the CPC.

21. Section 13(2) of the Act, reproduced above, is also an indication that Section 13(1) of the Act obviously applies to appeals from decrees as it states that no appeal shall lie from a decree of a Commercial Division or Commercial Court otherwise than in accordance with the provisions of the Act.

22. For the reasons noted above it is therefore clear that an appeal from a decree as defined under the CPC would lie under Section 13(1) of the Act.

23. We are also not inclined to accept the submission of the Respondent that the meaning of a ‘decree’ for the purposes of Section 13 of the Act would have to be read more restrictively than a ‘decree’ under the provisions of the CPC. From the provisions of Section 13 of the Act read with the CPC, we find no basis for this submission. As noted above, Section 13(1) does not restrict the appeals from judgments’ to any particular type of decree or class of decrees. Section 13(1A) of the Act then stipulates specific period of limitation for filing an appeal. The proviso to Section 13(1A) of the Act deals with the limited scope of appeals from orders and appeals under Section 37 of the Arbitration and Conciliation Act, 1996. This proviso does not concern appeals from decrees and since that is the basis on which the Appellant seeks to maintain this appeal, it does not arise for consideration in the facts of the present case. Section 13(2) of the Act is a non-obstante clause qua any other law for the time being in force or the Letters Patent Act of a High Court. It states that no appeal shall lie from any order or decree of a Commercial Division or Commercial Court otherwise than in accordance with the provisions of this Act.

24. The reason for noting these provisions is only to support our conclusion that Section 13(2) read with Section 13(1) of the Act does not restrict the appeals under the Act to any type or class of ‘judgments’ or ‘decrees as defined in the CPC. However, any appeal even from a decree would have to comply with the provisions as regards limitation for filing such an appeal under Section 13(1A) of the Act. The real effect of Section 13(2) of the Act is to exclude from the purview of Section 13 the wider meaning of the word ‘judgment’ under the Letters Patent of a High Court, thus restricting appeals under Section 13 to the categories mentioned in Section 13(1) and proviso to Section 13(1A) of the Act.

25. Having come to the conclusion that an appeal from a decree as defined by the CPC would lie under Section 13 of the Act, we will have to consider whether the Impugned Order is a decree within the meaning of Section 2(2) of the CPC.

26. Section 2(2) of the CPC, which defines “decree” reads as follows :

“(2) “decree” means the formal expression of an adjudication which, so far as regards the Court expressing it, conclusively determines the rights of the parties with regard to all or any of the matters in controversy in the suit and may be either preliminary or final. It shall be deemed to include the rejection of a plaint and the determination of any question within Section 144, but shall not include –

(a)any adjudication from which an appeal lies as an appeal from an order, or
(b) any order of dismissal for default.

Explanation.- A decree is preliminary when further proceedings have to be taken before the Suit can be completely disposed of. It is final when such adjudication completely disposes of the suit. It may be partly preliminary and partly final”

27. The question to be decided in the present case is whether the Impugned Order, which allows the Plaintiff to withdraw the First Suit is an adjudication that conclusively determines the rights of the parties to any of the matters in controversy in the suit. As noted above, the Appellant contends that such an adjudication does not have to be on a matter in issue or a matter of the merits of the suit and it can be on a collateral issue as well so long as that collateral issue is a matter in controversy in the suit. We have also noted and will deal with the submission that a ‘matter in controversy’ in a suit is wider than a ‘matter in issue’ in a suit.

28. Since the Impugned Order relates to the grant of liberty to file a fresh suit on certain conditions as stated in the Impugned Order, it would be relevant to note the provisions of Order 23 Rule 1(1) and (3) of the CPC, which reads as follows :

23. Withdrawal and adjustment of Suits

1. Withdrawal of suit or abandonment of part of claim – (1) At any time after the institution of a suit, the plaintiff may as against all or any of the defendants abandon his suit or abaondon a part of his claim :
Provided that where the plaintiff is a minor or other person to whom the provisions contained in rules 1 to 14 of Order XXXII extend, neither the suit nor any part of the claim shall be abandoned without the leave of the Court.
(2)…….
(3)Where the Court is satisfied, –
(a) that a suit must fail by reason of some formal defect, or
(b) that there are sufficient grounds for allowing the plaintiff to institute a fresh suit for the subject-matter of a suit or part of a claim, it may, on such terms as it thinks fit, grant the plaintiff permission to withdraw from such suit or such part of the claim with liberty to institute a fresh suit in respect of the subject- matter of such suit or such part of the claim.

29. Order 23 Rule 1(3) of the CPC sets out the circumstances in which a court can exercise its discretion for permitting the Plaintiff to withdraw the existing or pending suit with liberty to institute a fresh suit on the same subject matter of the first suit or part of a claim on such terms as the court thinks fit. To permit this leave, the court has to be satisfied: (a) that a suit must fail by reason of some formal defect, or (b) that there are sufficient grounds for permitting to institute a fresh suit for the subject matter of a suit or a part of a claim.

30. Whilst we are generally in agreement with the submission of Shri Khambhatta for the Appellant that a ‘decree’ need not be confined only to the merits of the dispute that arises in the suit as determined from the pleadings and that the expression ‘matters in controversy’ is wider than ‘matters in issue’, that by itself does not lead to the conclusion that an order under Order 23 Rule 1(3) of the CPC is a decree. Collateral issues that may be finally adjudicated by a court that determine the rights of parties in a suit itself may in certain cases fall within the definition of decrees. However, not all matters that are finally adjudicated in the course of a suit and on which there may be a disagreement between the parties are decrees.

31. The judgment relied upon by the Appellant in Mangluram Dewangan (supra) relies upon the judgment of the Lahore High Court in Niranjan Nath v. Afzal Hussain ( AIR 1916 Lah 245), which holds that an adjudication under Order 22 of the CPC that the right to sue does not survive, thus bringing to an end that very suit itself and precluding it from being pursued by a legal representative of the deceased plaintiff for all times to come are examples of situations where a determination of a collateral issue outside of the merits of the dispute would result in a decree within the meaning of the CPC.

32. In such a situation the decision of the court directing an abatement of the suit was held to be a decree because the right to represent the deceased was a point in controversy between the parties and the adjudicator determined their rights with respect thereto and put to an end the suit. However, it must be noted that the manner in which the suit stands concluded in this situation is very different from the consequence that follows from an order under Order 23 Rule 1(3) of the CPC. In the case of a suit that abates, as noted above, the result of the adjudication is that the legal representative of the plaintiff cannot in that suit or any other suit filed in that capacity agitate the grievance raised in the suit. The finality of determination of a matter in controversy has to be understood in that sense. The aggrieved party had no remedy whatsoever. This is clear from a reading of Order 22 Rules 1,3 and 9 of the CPC. It would be relevant to reproduce certain observations at paragraph 25, 27 and 28 of Mangluram Dewangan V/s. Surendra Singh (supra) that the Appellant has placed reliance upon.

“25. If the court orders that the suit has abated or dismisses the suit as having abated, as a consequence of rejection of an application under Order 22 Rule 3 of the Code, as noticed above, there is no determination of rights of the parties with regard to any of the matters in controversy in the suit and therefore, the order is not a decree. But if an order declares that the suit has abated, or dismisses a suit not as a consequence of legal representative filing any application to come on record, but in view of a finding that right to sue does not survive on the death of the sole plaintiff, there is an adjudication determining the rights of parties in regard to all or any of the matters in controversy in the suit, and such order will be a decree. But that is not the case here.

27. A full Bench decision of the Lahore High Court in Niranjan Nath v. Afzal Hussain – AIR 1916 Lahore 245 held as follows :
“After examining the matter carefully we consider that if a court passes a purely formal order recognizing the abatement, which is a fait accompli, such an order, though virtually disposing of the suit, does not adjudicate upon any rights, and cannot be treated as a decree. An order of this nature, as observed already, merely records an abatement, which has already taken place by reason of the lapse of six months*, after the death of the plaintiff, and does not contain any decision arrived at by the court. In a case of this kind Order 22, Rule 9 allows the legal representative to make an application for the revival of the suit, and the only question the court is thereupon required to determine is whether the applicant was prevented by any sufficient cause from continuing his suit, and if the decision is in the negative, the aggrieved party is entitled to prefer an appeal against that order under Order 43 Rule 1(k). The decision of the appellate court is, however, made final and a second appeal is not competent.
The language of Order 22, Rule 9(2) when carefully examined, leads us to the conclusion that it is confined to cases in which the abatement takes place by reason of an application not having been made within the time permitted by law to implead the legal SSP 16/27 representative of the deceased plaintiff or the deceased defendant, and that it has no applicability to cases in which the suit has abated on account of some other cause. This view receives support from the decision of the Madras High Court in Subramania Iyer v. Venkataramier (1915) 31 I.C. 4. Suppose, the sole plaintiff in a suit dies, and in spite of an application within six months* by his legal representative the court holds that the right to sue does not survive, and consequently directs the abatement of the suit. An abatement of this character obviously stands on a different footing. It does no take place ipso facto. The court does not record a merely formal order reciting a past event, as in the case of an abatement in consequence of an application not having been made within the prescribed period to implead the legal representative, but it exercises its mind in the determination of a matter in controversy. The decision of the court directing the abatement of the suit is, in our opinion, a decree, because the right to represent the deceased is a point in controversy between the claimant and the opposite party, and the adjudicator determines their rights with respect thereto, and puts an end to the case, there being no appeal from the adjudication as an appeal from an order. An application under Rule 9 is, as observed above, incompetent and it is difficult to believe that the Legislature intended that the decision of a matter, which concludes the suit, should be final and that the aggrieved party should have no remedy whatever. (*what is referred as `six months’ is three months, under Article 120 of Limitation Act, 1963). (emphasis supplied)

28. In Mitthulal vs. Badri Prasad – AIR 1981 Madh. Pradesh , a full Bench of the Madhya Pradesh High Court held as follows :

“There seems to be a general consensus of judicial opinion that all orders of abatement are not decrees. Only those orders of abatement are decrees in which the Court comes to the conclusion that the right to sue does not survive on the death of the sole plaintiff or on the death of one of the plaintiffs to the surviving plaintiffs. The orders of abatement which follow consequent on the failure of the legal representative of plaintiff to be brought on record within the period allowed by law or due to the Court deciding that a particular applicant is not the legal representative, such orders do not amount to decree. The reason being that the abatement is automatic consequent on the failure of the legal representative to be brought on record within the period of limitation and no formal order is necessary. So there is no adjudication on the rights of the parties in the suit or appeal by such an order. An order under Order 22, Rule 5 cannot obviously be said to fall within the definition of decree for the following reasons (i) the order is made only for the purpose of determining who should continue the suit as brought by the original plaintiff. It is not intended to determine and it does not, in fact, determine the rights of the parties with regard to any of the matters in controversy in suit. The question that arises for decision and actually decided is not one arising in the suit itself but is one that arises in a collateral proceeding and has to be got decided before the suit can go on; and (ii) In order to operate as a decree, the adjudication must be one between the parties to the original suit or their legal representatives, and with regard to only matters in controversy between the original parties and, therefore, cannot include a decision of the question as to whether certain individual is or is not entitled to represent one of such parties. In cases where the Court comes to the conclusion that the right to sue does not survive consequent on the death of the sole plaintiff or one of the plaintiffs to the surviving plaintiffs, there is final adjudication of the rights of the parties and the order amounts to decree.”
(emphasis supplied)

33. In contrast, the grant of leave to institute a fresh suit does not result in such kinds of consequences insofar as the defendant to a suit is concerned. No defendant has a right to defend a particular suit only but a defendant has a right to a defense in general. That right to a defense is available even in the suit instituted pursuant to liberty to file a fresh suit. There is no merit in the submission that the Impugned Order granting leave to institute a fresh suit amounts to a decree because the fresh suit is filed on a clean slate allowing the plaintiff to resile from admissions made in the First Suit, and is therefore a final adjudication on a matter in controversy putting to an end the right. There has been no conclusive determination or adjudication on the effect of the alleged admissions made in the First Suit, but only a prima facie observation in the Impugned Order. At an interlocutory stage even those admissions are only being prima facie considered for the grant of interim reliefs. If the Court is satisfied that there exist sufficient grounds for instituting a fresh suit on the same subject matter or cause of action, the judicial admissions if any made, in the First  Suit would not disappear and would be available to the defendant even in contesting the newly instituted suit. In fact, we have noted that this has been expressly kept open by the Learned Single Judge in the Impugned Order.

34. We are of the view that the grant of such liberty to file a fresh suit under Order 23 Rule 1(3) of the CPC is not an adjudication that conclusively determines the rights of parties in respect of any matter in controversy in the First Suit. Whilst the definition of ‘decree’ would encompass determinations on matters other than the merits of the dispute as ascertained from the pleadings in a suit, it must nevertheless refer to substantive and procedural rights of the parties. This is in fact borne out by the relevant paragraph of Halsbury’s Laws of India relied upon by the Appellant, which reads as follows :

65.012 – Rights of parties with regard to matters in controversy – The phrase ‘rights of the parties with regard to all or any of the matters in controversy in the suit’, means the substantive and procedural rights of the parties. It includes questions relating to the character and status of a party suing, the jurisdiction of the Court, the maintainability of the suit, the framing of the suit, the taking of accounts and other matters necessitating adjudication.

Thus, an order for dismissal of a suit for default of appearance, an order dismissing an application for execution for non-prosecution, an order refusing leave to sue as an indigent person or a mere right to sue is not a decree, as it does not determine the rights of the parties. As the words ‘parties to a suit’ imply a plaintiff and a defendant, an order made by a court upon an application moved by a third party, who is a stranger to the suit, is not a decree.

The expression ‘matters in controversy’ refers to the subject-matter of the suit with reference to which some relief is sought.”

35. The phrase ‘rights of the parties with regard to all or any of the matters in controversy in the suit’, has been said to mean ‘substantive and procedural rights’ of parties. Thus, the matter said to be in controversy must, though wider than a matter in issue, still be in respect of a substantive or procedural right of a party to the suit.

The permission to withdraw a suit with liberty to institute a fresh suit does not affect any substantive right of the Appellant/original Defendant in this case. As already noted, all its defenses on the merits of the Second Suit remain available to it including its right to rely upon the statement that it says constitute admissions in the First Suit. Further, no procedural right of the Appellant is affected either. The Appellant has no procedural right to defend a particular suit and it is not the case of the Appellant that the manner of grant of leave was ex parte or without hearing the Appellant. As the Impugned Order notes the Appellant was before the Learned Single Judge when the Impugned Order was passed in open court and when the Learned Single Judge considered and allowed the oral application for permission to withdraw with liberty to institute a fresh suit. Although the examples given in the above quoted passage from Halsbury’s Laws of India are only illustrative of rights of parties with regard to matters in controversy, those illustrations are also an indication that the right said to be affected by a matter in controversy must be somewhat substantive in nature and affect the position of the party in some substantive way. We are of the view that the Impugned Order does not have that effect on the rights of the Appellant.

36. As regards the various other judgments relied upon by the Appellants, it would suffice to say that we have no disagreement with them as general propositions of law and are respectfully bound to follow them. Some of the judgments that state well-settled and general propositions are in the cases of Bhagmal & Ors. and Rishabh Chand Jain (supra). Whilst we respectfully agree with the principle that to qualify as a decree the adjudication of a matter in controversy does not have to only relate to the merits of the case, that by itself does not mean that the Impugned Order satisfies the requirements of a decree.

37. Shri Khambata then placed reliance on the judgment in the case of K.S. Bhoopathy and Ors. (supra) in support of the submission that an order under Order 23 Rule 1(3) requires application of judicial mind and is not a formality because of its impact on the rights of the defendant in the suit. Before reproducing the relevant observations in this regard it is important to note the stage at which the application for withdrawal of the suit was made and allowed. In that case, as noted in paragraph 5, the trial court decreed the suit in favour of the plaintiff. In paragraph 6, it is noted that the first appellate court modified the decree relating to the pathway, holding that the plaintiff had no exclusive right of user of the pathway, and all the parties are entitled to same as it is a common pathway. Being aggrieved with the modification of the decree which diminished the right of the plaintiff, the plaintiffs filed a second appeal. Before the second appeal was admitted the appellant/plaintiffs filed an application under Order 23 Rule 1(3) seeking permission of the Court to withdraw the suit with leave to file a fresh suit.

38. It is clear from this background that the plaintiffs had already suffered a decree by the first appellate court that determined that it did not have an exclusive right to the pathway in question. This was a final determination at that stage of the proceedings. As noted in paragraph No.7, the appellant/plaintiff sought to withdraw the suit with leave to file afresh because no prayer for declaration of the plaintiffs title was made in the plaint and in view of the cloud raised against the exclusive title and right of user in the judgment of the lower appellate court it was necessary to withdraw the suit and file a fresh suit. The defendants objected to this application by the plaintiffs. The High Court, being the second appellate court, allowed the application under Order 23 Rule 1(3) of the CPC.

39. This decision was under challenge before the Supreme Court. In reversing the decisions of the High Court, the Supreme Court at paragraphs 13 and 17 observed as follows :

“13. The provision in Order XXIII Rule 1 CPC is an exception to the common law principle of non sait Therefore on principle an application by a plaintiff under sub-rule 3 cannot be treated on par with an application by him in excercise of the absolute liberty given to him under sub-rule 1, In (he former it is actually a prayer for concession from the Court after satisfying the Court regarding existences of the circumstances justifying the grant of the such concession. No doubt, the grant of leave envisaged in sub-rule (3) of Rule 1 is at the discretion of the Court but such discretion is to be exercised by the Court with caution and circumspection. The legislative policy in the matter of exercise of discretion is clear from the provisions of sub-rule (3) in which two alternatives are provided; (1) where the Court is satisfied that a suit must fail by reason of some formal defect, and the other where the Court is satisfied that there are sufficient grounds for allowing the plaintiff to institute a fresh suit for the subject matter of a suit or part of a claim. Clause (b) of sub-rule (3) contains the mandate to the Court that it must be satisfied about the sufficiency of the grounds for allowing the plaintiff to institute a fresh suit for the same claim or part of the claim on the same cause of action.

The Court is to discharge the duty mandated under the provision of the Code on taking into consideration all relevant aspects of the matter including the desirability of permitting the party to start a fresh round of litigation on the same cause of action. This becomes all the more important in a case where the application under Order XXIII Rule (1) is filed by the plaintiff at the stage of appeal. Grant of leave in such a case would result in the unsuccessful plaintiff to avoid the decree or decrees against him and seek a fresh adjudication of the controversy on a clean slate. It may also result in the contesting defendant losing the advantage of adjudication of the dispute by the Court or courts below. Grant of permission for withdrawal of a suit with leave to file afresh suit may also result in annulment of a right vested in the defendant or even a third party. The appellate/second appellate court should apply its mind to the case with a view to ensure strict compliance with the conditions prescribed in Order XXIII Rule 1(3) CPC for exercise of the discretionary power in permitting the suit with leave to file a fresh suit on the same cause of action. Yet another reason in support of this view is that withdrawal of a suit at the appellate/second appellate stage results in wastage of public time of Courts which is of considerable importance in the present time in view of large accumulation of cases in lower courts and inordinate delay in disposal of the cases.”

17. From the above it appears that the approach of the High Court was that the plaintiff should have prayed for declaration of title which they had omitted to include in the plaint. It was for the plaintiffs to frame their suit in any form as advised. If they felt that there was a cause of action for declaration of their title to the suit property they could have made a prayer in that regard. If they felt that a declaration of their right to exclusive user of the pathway was necessary they should have framed the suit accordingly. One the other hand the plaintiffs merely sought a decree of injunction permanently restraining the defendants from disturbing their right of user of the property. From the facts and circumstances of the case as emanating from the judgments of the trial court and the first appellate court it is clear that the plaintiffs realised the weakness ia the claim of exclusive right of user over the property and in order to get over the findings against them by the first appellate court they took recourse of Order XXIII Rules 1(3) CPC and filed the application for withdrawal of the suit with leave to file fresh suit. The High Court does not appear to have considered the relevant aspects of the matter. Its approach appears to have been that since the interest of the defendants can be safeguarded by giving them permission for user of the pathway till adjudication of the controversy in the fresh suit to be filed, permission for withdrawal of the suit as prayed for can be granted. Such an approach is clearly erroneous. It is the duty of the Court to feel satisfied that mere exist proper grounds/reasons for granting permission for withdrawal of the suit with leave to file fresh suit by the plaintiffs and in such a matter the statutory mandate is not complied by rnerely stating that great of permission will not prejudice the defendants. In case such permission is granted at appellate or second appellate stage prejudice to defendant is writ large as he loses the benefit of the decision in his favour in the lower court.”

40. The observations as above do not, in our view, advance the case of the Appellant on the Impugned Order or an order under Order 23 Rule 1(3) in circumstances such as those of the present case being a ‘decree’ under the CPC. The Supreme Court undoubtedly held that an order permitting withdrawal with liberty to institute a fresh suit on the same subject matter cannot be made mechanically or without application of judicial mind. No part of what we have stated above is inconsistent with this observation. The observation that grant of leave may in some cases result in annulment of a right vested in a defendant, cannot be read in isolation de hors the facts of that case where the stage at which the application for withdrawal with liberty to institute a fresh suit was made at the stage of a second appeal when there was already a partial decree against the plaintiff operating by reason of the decision of the first appellate court. It is clear on a reading of this judgment that the Supreme Court gave particular emphasis to the fact that the application under Order 23 Rule 1(3) as allowed by the High Court was at the stage of a second appeal. This is clear from paragraphs 13 and 17 of the judgment. Even otherwise, a statement in the judgment that vested rights of the defendant may be annulled by an order permitting SSP 24/27 withdrawal with liberty to institute a fresh suit would not bring such an order within the definition of a decree for the reasons separately noted above. Therefore, we are of the view that this judgment is distinguishable on facts and in any event is not an authority for the proposition that an order passed under Order 23 Rule 1(3) of the CPC would satisfy the requirements of a ‘decree’ only because it is a decision that has to be made judicially with application of mind and taking into consideration the rights and interests of the defendants in relation to such an application.

41. The Appellants reliance on the judgment in Anil Kumar Singh (supra) and in particular paragraphs 24 and 25 does not carry the Appellants submission any further. The facts of this case pertain to an application under Order 23 Rule 1(1) and not Rule 1(3). This judgment only recognises that the defendant has a right to object to an application made by the plaintiff for leave to institute a fresh suit and that in such an event it is for the court to decide as to whether permission to institute a fresh suit should be granted and if so on what terms. For the reasons already stated when discussing the judgment in K.S. Bhoopathy and Ors. (supra) this observation does not make any such adjudication a ‘decree’ under the CPC.

42. Finally, the Appellant also relied upon the judgment in the case of Kandapazha Nadar (supra), which held that withdrawal of a suit without permission decides nothing and is not a decree. It has been argued in the written submissions filed by the Appellant that “The natural sequitur that follows is that withdrawal with permission to refile would be a decree, given that such an adjudication finally decides whether the conditions or Order 23 Rule 1(3) have been satisfied or not, and whether or not liberty to file a fresh suit should be granted, resulting in the final disposal of the suit.”

43. We find no merit in this submission of the Appellant based on Kandapazha Nadar (supra). It is an extremely well-established principle on the law of precedents that a judgment is only an authority for the proposition for what it actually decides and not for what is inferred from the ratio of a judgment. There is no dispute that the Supreme Court judgment in Kandapazha Nadar (supra) was only in relation to an order permitting withdrawal without permission to file a fresh suit. The judgment expresses no view whatsoever on the effect of an order permitting withdrawal with liberty to institute a fresh suit. That never arose for consideration in Kandapazha Nadar (supra). Thus, no ratio or principle based on a ‘natural sequitur’ can be derived from the judgment in Kandapazha Nadar (supra).

44. For all of the reasons stated above, we would answer the first issue in the negative and hold that the Appeal is not maintainable under Section 13 of the Act as the Impugned Order is not a decree under the CPC. Having come to this conclusions, we are not required to address the second issue as to whether the Impugned Order is in accord with Order 23 Rule 1(3) of the CPC.

OPERATIVE ORDER

45. In view of our reasons and conclusion as stated above we order that:

(i) The present Appeal is dismissed as being not maintainable. Interim Application (L) No.24920 of 2021 also stands dismissed. We make it clear that we have expressed no opinion on the merits of the Appeal and all rights and contentions in this regard are expressly kept open;

(ii) For a period of three weeks from the date of uploading of this Order the Respondent/original Plaintiff will not move any application for ad- interim/interim reliefs in the Second Suit so as to enable the Appellant/original Defendant to assail the Impugned Order;

(iii) There shall be no order as to costs.

                                     ( MILIND N. JADHAV, J. ) 

( S.J.KATHAWALLA, J. )